Big Pharma Pushes for Changes to Growing Drug Discount Program


The pharmaceutical industry is continuing to push for legislative and regulatory changes to the federal 340B drug discount program. The program has grown over 600 percent in a dozen years, according to industry figures.

Under the program, drug manufacturers provide outpatient drugs to covered entities, such as safety-net hospitals, at significantly reduced prices. Hospitals aren’t required to share the discount they receive with patients, so patients aren’t benefiting from the program, according to industry executive Lori Reilly. Reilly, executive vice president of policy, research, and membership at the Pharmaceutical Research and Manufacturers of America (PhRMA), spoke Nov. 1 at a briefing the group held for reporters.

Repeating the industry’s long-standing position, Reilly said fundamental reforms are necessary. She said the program needs a clear definition of what constitutes a 340B patient because some hospitals are using the lack of clarity on the definition to “game the system.” She also said the program needs a new metric for determining which hospitals are eligible to ensure only true safety-net hospitals are participating.

In 1992, just 51 hospitals participated in the 340B program, but in 2017, more than 2,300 hospitals participate, Reilly said. Also, she said 340B drug sales were $2.65 billion in 2004, and that number grew to $16.2 billion in 2016. Overly broad guidance, historically weak oversight, and other factors have led to this dramatic growth, the PhRMA executive said.

PhRMA also is pushing for a revision of an Obama-era guidance that vastly expanded the program by increasing the use of contract pharmacies and wants a sliding-fee scale to ensure that low-income and/or uninsured patients benefit from discounts, Reilly said. No bills have been introduced that would make any of these changes.

In response to the pharmaceutical group’s assertions about the need for reforms, a hospital group leader said the changes would harm patients’ access to care.

Jeff Davis, vice president with 340B Health, told me all of PhRMA’s proposals “would significantly reduce the size of the 340B program and shrink the benefit that hospitals and their patients are able to access from 340B.” Davis’s group represents hospitals and health systems that participate in the program.

Data show that 340B hospitals are providing much higher levels of care to low-income patients than non-340B providers, Davis said. He added that the “the eligibility criteria for 340B hospitals is working properly to make sure only safety-net hospitals, hospitals that treat a high level of low income patients, are in the program.”

Hospitals are using 340B savings to provide comprehensive care to patients and are using the savings to do things like opening up clinics that provide services to people with chronic conditions like AIDS/HIV, diabetes, and cancer. “To be able to continue providing those services, they need to rely on 340B,” he said.

Read my full article here.

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