NEJM Study Highlights 340B Shortcomings; Advocates Push Back

A new report on the financial consequences of the federal discount drug program elicit a response from an advocacy group which complains of ‘incomplete conclusions.’ 

A study from the New England Journal of Medicine asserts the 340B Drug Pricing Program does not fully utilize its funding to achieve its goals, but a pro-340B advocacy group says the study is hampered by a “flawed understanding” of the program.   

NEJM released the study, “Consequences of the 340B Drug Pricing Program,” on Thursday examining the $16 billion federal program which has been the subject of criticism for profiteering and abuse.

“Financial gains for hospitals have not been associated with clear evidence of expanded care or lower mortality among low-income patients,” the study reports. “The extent to which hospitals support the mission of the program is subject to minimal oversight.”

The 340B program dispenses federal Medicare payments to qualified disproportionate share hospitals (DSH) for the cost of outpatient drug purchases. However, the study argues hospitals are incentivized to prescribe discounted drugs to Medicare patients with private supplemental insurance and individuals with “generous insurance coverage” rather than those who are underserved.

The study also argues the program has not achieved its stated goals despite increasing participation and revenues. The authors found no evidence that hospitals have used 340B revenues to invest in improved inpatient care for low-income patients, safety-net providers, or enhance care to reduce mortality.

The report addresses growing provider consolidation, suggesting 340B might be responsible for the recent trend. But the Department of Health and Human Services’ decision to lower reimbursements to participating hospitals is expected to slow consolidation while avoiding negative impacts on care for low-income patients, the study reports.  

NEJM’s findings come as discussions to reform the controversial program continue on Capitol Hill, with at least three bills proposing fixes to improve transparency and accountability.

340B Health, which represents hospitals and health systems, issued a statement Thursday responding to “flaws” in the NEJM study. The group challenges the findings, arguing the study excluded DSHs with an adjustment percentage above 21.75%, (the portion of a hospital’s population eligible for federal funding), and that external market factors are causing provider consolidation.

“This finding is inconsistent with existing research that demonstrates 340B hospitals treat high volumes of low-income patients and provide high levels of uncompensated care and specialized services to care for low-income patients,” the statement read. “340B hospitals are using the program in many ways that are consistent with its intended purpose to support care to low-income and rural patients with such conditions as HIV/AIDS, cancer, diabetes, and other chronic conditions.”