Another Strike in the 340B War

By January 10, 2019 Commentary

I confess to taking immense pleasure in watching two of the biggest villains in the health care spending conundrum bash each other over their business practices.  The 340B program was originally designed to allow certain providers to offer less-expensive drugs to low-income patients.  Hospitals have grossly abused the program and made immense profits in doing so.  Drug companies aren’t happy because this means they are getting less money for more prescriptions and missing opportunities to get their usual immense profit margins.  So tragic for both industries to face the potential that Congress or CMS may rein in the program.  But maybe consumers will get some relief.  Here is the latest research salvo, again from the drug manufacturers, using hired gun Berkeley Research Group.   (BRG Report)   The analysis looked at spending trends before and after a hospital enrolls in the 340B program.  379 hospitals enrolled in the program during the study period from January 2009 to January 2016.  Drug spending was tracked at a patient level.  The average per patient drug spend increased about 32% after the hospital switched to the program, compared to a spending increase of 13% at hospitals which did not enroll in the program.  Looking just at patients in the first year of the hospital’s participation, the spending increase was 21% compared to 4.7% at the control group.  There are differences among hospitals in the program, some appear to be better at figuring out how to maximize their profits by taking the low price drugs and using them for patients with good insurance coverage.  63% of hospitals in the program had a per patient drug spending growth rate at least 2 percentage points higher than that for the control group of hospitals.  This analysis just confirms that many hospitals have used the 340B program to maximize profits, not lower costs for patients and third-party payers.  But again, hard to feel sorry for drug companies, especially after the most recent revelations about their cancer drug profits, reported here earlier this week.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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