Skip to main content

News

340B Drug Program Sees Massive Changes on the Horizon

By Jack O'Brien  
   January 18, 2018

A proposal in the Senate aims to create savings for health providers while a new report details how to maximize the program’s pharmacy benefits.  

The 340B Drug Pricing Program represents ample healthcare and business opportunities to some, while others see it as a federal program in need of significant reforms to address outstanding cost concerns.

The program, which provides Medicare payments for outpatient drugs to hospitals serving high volumes of low-income patients, has garnered both praise and controversy in recent months. The program is viewed as crucial for rural hospitals attending to high Medicare populations, but also as a lightning rod for perceived governmental mismanagement.

Sage Growth Partners, a healthcare business consultant agency based in Baltimore, released a report Thursday titled, “Realizing the Full Power of 340B Pharmacy Benefits.” The report includes three distinct 340B models health systems can implement: do-it-yourself, contract pharmacy, or global managed services.  

Dan D’Orazio, CEO of Sage Growth Partners, said while contract pharmacy models have been the most popular approach, businesses have to assess their own expectations and needs when getting involved with the 340B program.

“This report takes a look at how you decide to manage or operate one of these entities and whether you go it alone, find a commercial partner like a pharmacy or find a managed partner to help you do that,” D’Orazio told HealthLeaders Media. “There are different models to do that and I think they have different ramifications for profitability, patient care, coordination of care, and medication adherence.”

D’Orazio said recent reports have indicated the 340B program is “a little out of control” but said the public should not be scared, adding the program represents a “real opportunity” for health systems dealing with financial pressures. He also said the program’s rules are clear, though hospitals may need to engage with managed partners for experience and assistance with any lingering complexities.   

Ire, attention center on 340B

Despite the enthusiasm to maximize 340B benefits, the program has sustained pointed criticism in recent months.

A recent Pacific Research Institute study found numerous cases of abuse and profiteering, ultimately urging Congress to reform the program. A report from the Department of Health and Human Services’ Office of Inspector General last month highlighted $4.4 billion in federal funds misspent on health care programs last year, including 340B.

Those interested in implementing the strategies detailed in the Sage Growth Partners’ report will have to account for legislative corrections, which could be on the way.

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.


Get the latest on healthcare leadership in your inbox.