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Analysis

1,100 Hospitals Press HHS to Enforce 340B Pricing

By John Commins  
   September 10, 2020

Hospital stakeholders complain that major drug makers are refusing to offer mandated drug discounts for safety-net providers.

More than 1,100 hospitals in 46 states and the District of Columbia on Thursday urged the federal government to ensure that drug makers continue to provide discounts mandated under the 340B Drug Pricing Program for safety-net providers.

"340B enables our hospitals to reduce pharmaceutical costs for millions of patients in need and stretch our scarce resources to serve more patients and offer more comprehensive services," the hospitals, members of 340B Health, said in a letter to Health and Human Services Secretary Alex Azar.

The petitioning hospitals noted that 340B hospitals provide 60% of uncompensated and unreimbursed care and 75% of hospital care to Medicaid patients.

"The recent actions of a growing number of major pharmaceutical manufacturers would undermine the very reason this program exists," the hospitals said.

The hospitals complained that several drug makers have cut off access to discounted drugs, and they singled out AstraZeneca, Eli Lilly (Azar's former employer), Merck, Sanofi, and Novartis as the most egregious offenders.

"For example, AstraZeneca has declared it no longer will provide 340B pricing for any of its drugs that will be dispensed through the vast majority of 340B contract pharmacies," the hospitals said. "Eli Lilly has also stopped providing 340B pricing to all 340B contract pharmacies for all of its drugs."

The list includes some of the priciest drugs for cancer and diabetes.

At the same time, Merck, Sanofi, and Novartis, have demanded that 340B hospitals and other safety-net providers submit millions of contract pharmacy claims, with a threat to cut off access to 340B drugs is their demands are not met.

"Providers have no legal obligation to share this data, most of which does not relate to any 340B obligation," the hospitals said. "These collective actions to deny access to 340B pricing are clear violations of the 340B statute that will set a dangerous precedent."

It's not clear whether Azar will respond to the request because he's been pushing to cut 340B payments for more than a year.

The 340B program allows qualified hospitals to buy certain outpatient drugs at or below cost to extend scarce federal resources.

However, HHS said it would cut the reimbursement by 28.5% after complaining that the 340B program has created a large profit margin between the price that hospitals pay for 340B drugs and the reimbursement paid by Medicare.

As a result, HHS said hospitals would be incentivized to overprescribe the discounted drugs. That concern was validated by a Government Accountability Office report in 2015 which showed that Medicare Part B drug spending was substantially higher at 340B hospitals.  

"Since HHS took the action that the court affirmed today, we have saved more than $4.8 billion in lower drug costs and reinvested these savings in the Medicare program," Azar said in July, after the U.S. Court of Appeals for the District of Columbia reversed a district court ruling from 2018, and ruled that HHS had the statutory authority to cut the 340B program.  

$64 Billion in Community Benefits

Also Thursday, the American Hospital Association released an analysis showing that safety-net providers under the 340B program provided more than $64 billion in community benefits in 2017, up from $56 billion in 2016.

"This new report once again confirms the immense value of the 340B drug savings program, which allows those eligible hospitals in particular to provide a unique range of important programs and services to their patients and communities, many of which would otherwise be unavailable," said AHA President and CEO Rick Pollack.

In July, the AHA released a separate analysis showing that all tax-exempt hospitals provided $100 billion in total benefits to their communities in 2017.

“The recent actions of a growing number of major pharmaceutical manufacturers would undermine the very reason this program exists.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

The hospitals singled out AstraZeneca, Eli Lilly (Azar's former employer), Merck, Sanofi, and Novartis as the most egregious offenders.

The plea from hospitals comes as HHS presses ahead with big reimursement cuts to the 340B program.

Federal auditors have said 340B creates a large profit margin between the price that hospitals pay for 340B drugs and the reimbursement paid by Medicare.

Separately, an AHA analysis releasted today showis that 340B providers accounted for $64 billion in community benefits in 2017, up from $56 billion in 2016.


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