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Research Finds Some Hospitals Are Raising The Cost of Cancer Drugs

Analysis  |  By Amanda Schiavo  
   September 20, 2022

Forty-four percent of hospitals view the 340B Drug Pricing Program as a critical revenue source.

The original purpose of the 340B Drug Pricing Program was to help ensure patients with cancer could afford the life-saving drugs they’d need, however, a lack of regulation and oversight has gotten in the way of the original mission, and new research from the Community Oncology Alliance found that safety net hospitals have hiked the cost of cancer drugs almost five times their 340B purchase price.

The Community Oncology Alliance examined 49 top acute care hospitals with many uninsured patients and found that these hospitals price the top oncology drugs at 4.9 times their 340B acquisition costs, assuming a 34.7% discount, which the report calls a conservative estimate. The lowest average markup, according to the report, was 3.2 times and the highest was 11.3 times their 340B acquisition costs.

"The 340B program is now seen as a major revenue source by 44% of the nation’s hospitals, particularly in cases when they utilize the discount program on patients with insurance and retain the spread between the deeply discounted 340B price and insurance reimbursement," the report reads. "There is no clear definition of eligible 340B patients and there are no requirements for 340B hospitals to pass savings to patients, though there is an implicit expectation that these facilities would reinvest the funds to support care for patients in need of financial assistance. Yet, concerns about the lack of transparency into how much money 340B hospitals generate from the program or how they use it have also augmented the calls for increased hospital price reporting."

The report suggests that current transparency regulations may not be enough to accurately assess the pricing transparency on the margins that hospitals make on 340B products. Though the report does acknowledge that hospital reporting has "improved slightly," further legislative and regulatory changes are needed to remediate mark-ups among 340B hospitals.

Amanda Schiavo is the Finance Editor for HealthLeaders.

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