July 5, 2013—The head of a patient group that has been critical of the 340B drug discount program told a House health subcommittee member last week he was correct to understand that hospitals leverage their 340B savings to buy competing cancer clinics.[ms-protect-content id=”2799″]
Testifying on June 28 before the Energy and Commerce Subcommittee on Health, Nancy Davenport-Ennis of the National Patient Advocate Foundation (NPAF) said “initially the intent was to have 600 to 900” hospitals enrolled in 340B but that now there are “over 6,000” and they “are not necessarily consistently offering support to the at-risk population.” Instead, she continued, hospitals are using their 340B savings “to recruit community oncologists to come into that hospital setting.”
“So just to be sure,” interjected Rep. Bill Cassidy (R-La.), “the program that is supposedly the subsidized care for the uninsured and for the Medicaid and Medicare patient to bring a set of services that otherwise they would not be able to have, you’re saying there’s evidence that it’s not being used for that but rather to subsidize the purchase of community practices, bringing them into the hospital outpatient department and in the meantime increasing costs to Medicare, to the patient, and decreasing convenience? Is that what you’re saying?”
“Yes,” Davenport-Ennis responded, “what I am saying is, indeed, the 340B hospital structure now allows it to offer very attractive packages to oncologists for them to leave their practices and associate or to bring their entire practices to the hospital setting. “
Rep. Cassidy, who is a physician, then said, “Now, I must say that … I still see patients in the Louisiana public hospital system and that there are some hospitals that I will declare that are still doing the correct mission with the 340B program … A lot of my patients would not have drugs otherwise.”
The subject of the hearing was Medicare Part B reimbursement for drugs administered in physician’s offices and hospital outpatient settings.
In April, Rep. Cassidy and Senate Judiciary Committee Ranking Member Charles Grassley (R-Iowa) sought detailed information from a Georgia hospital about its participation in 340B after a hospital official defended the program on national television. In February, they and four other lawmakers asked the Health Resources and Services Administration (HRSA) for an accounting of its audits and recertification of 340B covered entities. Last year, Rep. Cassidy sponsored a bill that would have exempting manufacturers from providing 340B discounts on most generic injectable drugs and asked HRSA to audit another Georgia 340B hospital.
Davenport-Ennis’s group belongs to a drug industry-led alliance that seeks to reduce hospital participation in 340B and limit the provision of 340B discounted drugs to the indigent uninsured.
The Energy and Commerce subcommittee also heard testimony from a representative of U.S. Oncology Network, a group financed by the specialty pharmacy division of McKesson Corp. “For 340B hospitals, the margin on Medicare drugs is over 30 percent, where for community clinics the margin is zero to negative 2 percent,” he said. “It is no wonder that drug spending is increasing so rapidly in the hospital outpatient setting and that care is moving in that direction.”
Safety Net Hospitals for Pharmaceutical Access (SNHPA), which represents 340B hospitals and health system, said its members’ access to 340B discounted drugs is a marginal factor in the broader 30-year trend toward consolidation of private physician practices with hospitals. It also said that Medicare reimbursement rates for 340B hospital outpatient drugs recognize that these hospitals serve high volumes of vulnerable patients and use their 340B savings to better serve such patients. Both the Centers for Medicare and Medicaid Services and the Health and Human Services Office of the Inspector General (OIG), it said, have concluded that it was never intended for 340B covered entities pass their program savings to Medicare.
SNHPA also said hospital participation in 340B has grown due to deliberate decisions by Congress. It said the number now stands at about 2,000, not the 6,000-plus figure cited by Davenport-Ennis. According to the American Hospital Association, the total number of registered U.S. hospitals is 5,724.[/ms-protect-content]