July 23, 2014—Safety-net health care providers saved an estimated $1.6 billion in 2011 by participating in the 340B program, a new analysis by the RAND Corp. shows.[ms-protect-content id=”2799″]
The drug discount savings figure appears in the first report from RAND’s 340B Program. The think tank announced the initiative last October. The report, released on July 21, examines 340B’s history, organization, and metrics and offers policy considerations.
RAND based its 340B program savings estimate on prior findings that 340B drug spending was around $6 billion in in 2011, or about 2 percent of total U.S. prescription drug spending. The report points out that 340B savings are equal to just 4 percent of what the federal government and the states spend on major health care safety-net initiatives such as federal grants to health centers, federal Medicare disproportionate share hospital payments, and state and federal Medicaid DSH payments.
Elsewhere in the report, RAND addresses the disagreement between drugmakers and providers over 340B’s purpose. Some manufacturers, it notes, think hospitals use 340B discounts inappropriately “to generate revenue outside of Congress’s original intent to serve indigent populations.” Hospitals and other providers, it continues, “maintain that any additionally generated revenue contributes to the procurement of comprehensive services for vulnerable populations.”
“It appears that lawmakers hoped that 340B would maintain or improve the care received by uninsured and indigent patients,” RAND writes. “However, 340B was designed to focus on covered entities rather than uninsured or other patient populations, with the hope that covered entities would use 340B savings to improve and expand care in general, benefitting uninsured, indigent, and other patients.”
RAND also weighs in on the debate over the 340B patient definition, in which drugmakers have argued that Congress wanted 340B to benefit uninsured, indigent patients only. “Many individuals with private or public health insurance will meet [340B program] eligibility requirements and can therefore access 340B-purchased drugs alongside uninsured and indigent patients,” RAND says. “There are no patient eligibility criteria based on financial need.”
As of August 2013, RAND says, there were 7,898 covered entities enrolled in 340B comprising 16,869 sites. RAND noted that 340B entities and sites had just over 12,000 contractual arrangements with retail pharmacies to dispense discounted drugs to eligible patients.
The report’s section on future policy considerations observes that “while covered entities may use discounted self-pay and sliding scale programs to expand pharmacy services to working poor and indigent patients, these features are not part of the 340B program.” RAND also points out that covered entities still have no way to tell whether the prices they pay for pharmaceuticals “reflect the appropriate 340B discounts.”
“While the [Affordable Care Act] includes provisions that expand … oversight and monitoring of [340B] drug prices reported by manufacturers, a real-time, web-based pricing portal has yet to be implemented,” it notes.[/ms-protect-content]