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The Latest Salvo in the 340B War

By December 20, 2018Commentary

Two highly sympathetic industry sub-segments, hospitals and the pharmaceutical industry, are slugging it out to see who can rip taxpayers and consumers off the most in regard to drugs covered by the 340B program.  The latest “research” to support one side or the other comes from BRG and supports the drug manufacturers attempts to cut the program back.  Just so we are clear, hospitals are massively abusing the program, but drug makers only want to end that so they charge more money to payers and keep the profits for themselves.   (BRG Paper)   The paper builds on earlier work from the Government Accounting Office and Milliman suggesting that hospitals in the 340B program expanded use beyond that intended and made large profits from the program.  The researchers attempted to identify whether hospitals that became part of the 340B program had different spending trends than those that did not.  379 hospitals met this criteria and claims data was used to identify spending patterns on over 1.9 million patients at these hospitals who had at least one encounter before and after 340B enrollment.  On average, per patient weighted average drug spend increased 32.4% in the year after 340B enrollment.  Hmmm, that does seem a little suspicious.  So what happened with a similar group of patients at hospitals that didn’t enroll in the program.  Their spending increased only 13.4%, so there was almost a 20 percentage point difference in drug spending growth.  Repeating the analysis on a per patient date of service basis finds an even larger gap in drug spending trend.  Not every hospital showed this trend, but 63% of the 340B ones had a trend at least 2 percentage points over the control group.  There appeared to be little difference in urban versus rural hospitals or teaching versus non-teaching facilities.  Morbidity scores and score growth rate appeared similar across the hospitals as well.  Seems to be little doubt that once hospitals get in the 340B program they prescribe more drugs and more expensive ones, on which they have higher margin opportunities.  Just scummy behavior.  And of course Congress is sitting on its hands, failing to address the problem.  Wonder if all those hospital contributions have anything to do with that?  And even if we got rid of the program, you can assume the drug companies won’t do anything to make their products more affordable.  Great holiday thoughts!

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