Drugmakers Want Tough Scrutiny of 340B Discount Program

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By Bronwyn Mixter

Dec. 6 — A federal drug discount program for safety-net providers is experiencing rapid growth and deserves tough scrutiny, a group linked to drugmakers said Dec. 6.

The group, AIR 340B, said in a report the federal 340B drug pricing program is expected to reach $23 billion in total drug sales by 2021, up from the estimated program sales for 2016 of $16.1 billion. AIR 340B said the program’s growth has gone unchecked for too long and policymakers should re-examine it to ensure the program is serving its original intent to improve access to drugs for uninsured or vulnerable patients.

While AIR 340B has been pushing for action to limit the expansion of the program, safety-net providers such as hospitals say the program should be protected because it allows them to provide more care to patients with no or little insurance.

“There’s a lot of uncertainty about what’s going to happen” with the 340B program, Ted Alexander, senior legislative assistant for Rep. Chris Collins (R-N.Y.), said at a Dec. 6 roundtable discussion sponsored by AIR 340B. Specifically, Alexander said Collins wants transparency in the program. Alexander said a number of different health-care bills will be coming through the next Congress, and stakeholders should have more information on how the program affects federal spending.

Safety-Net Providers Weigh In

Randy Barrett, 340B Health’s vice president of communications, told Bloomberg BNA in a Dec. 6 e-mail “yet again, the drug industry has commissioned a cynical report designed to protect future profits.” 340B Health represents safety-net providers participating in the program.

“The report confirms that safety-net hospitals pay billions to pharmaceutical companies annually through the 340B program,” Barrett said. “These hospitals care for more poor patients than non-340B providers and supply $24 billion in uncompensated care each year.”

Barrett said, “cutting back the program would result in higher medicine prices and reduced access to clinical care for the poor across America.”

“With drug prices skyrocketing, now is not the time to make changes to a program that is so critical to providers that serve our nation’s most vulnerable patients,” Barrett said.

Key Findings

The report said a key driver of program growth for the next five years will be expanded use at existing 340B entities through practice acquisitions, physician practice affiliations, patient referrals and contract pharmacies.

Also, the report said by 2021, the use of contract pharmacies in the 340B program will exceed $6 billion.

The Health Resources and Services Administration, the agency that oversees the program, in 2010 issued guidance allowing covered 340B entities to contract with an unlimited number of third-party pharmacies to dispense 340B drugs. The report said the guidance resulted in a dramatic growth in contract pharmacy arrangements, and contract pharmacy arrangements are expected to continue to drive 340B sales for at least the next five years.

“The rapid growth of the 340B program and its projected growth over the next five years are alarming,” Stephanie Silverman, AIR 340B’s spokeswoman, said in a press release on the report. “Even as the number of uninsured Americans has declined, the 340B program is continuing to grow, raising questions about whether and how the program is truly benefiting patients in need.”

Lack of Oversight Funding

The report said the president’s budget for HRSA allocates only $10 million for the program, which may not be adequate to ensure proper oversight.

At current staffing levels, the average HRSA auditor will be responsible for providing oversight of $1 billion in drug purchases at more than 4,000 distinct covered entity or contract pharmacy locations by 2021, the report said.

To contact the reporter on this story: Bronwyn Mixter in Washington at bmixter@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

For More Information

The report is at http://src.bna.com/kyE.

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.

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