The federal 340B program was established to allow registered 340B entities to get mandated discounts on drugs prescribed for low-income and uninsured patients. Because of loose regulatory language, the program appears to have expanded far beyond this original intent and a review is underway to potentially make changes to the program. A pair of studies reported in Health Affairs analyzed use and dispensing patterns for 340B pharmacies. (HA Article 1) (HA Article 2) The first study looked at what hospitals have done with the program. From 2001 to 2011 the number of 340B sites doubled to 16,500 locations. A primary criticism is that much of this expansion is driven by hospitals seeking to make profits by prescribing drugs priced under the 340B program to patients with private insurance or Medicare coverage, but not passing the discounted price the hospital pays on to the patients or third-party payer. For 2012, one health system, the Duke University Hospital, made $282 million over five years. The authors looked at whether the newer 340B sites were still serving the intended populations. In 2012 there were 960 340B hospitals who were also in the disproportionate share program and 3964 outpatient clinics affiliated with those hospitals. Both the number of hospitals and outpatient clinics has grown rapidly in the last ten years. The new DSH hospitals coming into the program are servicing fewer low income communities. This suggests that hospitals are joining the program and establishing outpatient clinics with the intent of creating profit opportunities by serving more insured patients with 340B drugs.
The second study looked at 340B contract pharmacy dispensing patterns. The 340B program allows participating medical providers which do not have an in-house pharmacy to contract with outside pharmacies to be able to participate in the program. Coupled with the results of the study above, you can see the profit opportunity now extends beyond the actual 340B entity to the contract providers, who include large retail chains like CVS and Walgreens. The number of 340B entities with at least one contract pharmacy has risen to 4719 and one out of 4 US retail pharmacies is now a 340B contracted pharmacy. Big business. The study looked at prescriptions dispensed by Walgreens under the contracted pharmacy program. The most notable finding in the analysis is that the 340B prescriptions are only 54% for generics, while 82% of all Walgreens prescriptions are generics. Given the significantly lower cost of generics, this is greatly adding to drug spending. While some of the difference is accounted for by different categories of drug use in 340B, most of it isn’t. Many of the 340B prescriptions did appear to be for otherwise uninsured or low-income patients and for serious disease like HIV or tuberculosis. But it is also apparent that the program is being run in a way that results in excessive spending on drugs, often for patients who weren’t even intended to be covered by the program.