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Proposed Review of 340B Drug Discounts Irks Hospitals

John Commins, for HealthLeaders Media, March 26, 2014

The AIR 340B study found that:

  • More than two-thirds of hospitals that receive 340B drug discounts provide less charity care as a percentage of patient costs than the national average for all hospitals, including for-profit hospitals which do not qualify for 340B.
  • For 24% of 340B hospitals charity care represents 1% or less of the hospitals' total patient costs.
  • Only 22% of 340B hospitals provide 80% of all charity care delivered by 340B DSH (disproportionate share) hospitals.
  • Drug purchases through the 340B program will almost double, from $6 billion in 2010 to $13.4 billion by 2016, a cost which will be borne by drug makers.

Silverman says the 340B program lowers outpatient drug costs for participating hospitals on the presumption that they will help vulnerable, uninsured patients but that there are no restrictions on how hospitals spend the revenues generated if they charge both insured and uninsured patients higher prices than the 340B discount.

That contrasts with requirements on other providers in the 340B program who must show that they provide services to vulnerable populations and that they reinvest the revenues into specific services for their vulnerable populations.

"What we would like to see done is for Congress to do a full examination of appropriate eligibility criteria," Silverman says. "We want to be partners in that conversation with other stakeholders. We also believe there needs to be substantially more oversight by regulators and more requirements for accountability among hospital participants on how the funds are deployed and whether or not they are reaching their intended beneficiaries."

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