by admin | June 29, 2011 8:32 pm
June 29, 2011—The 340B drug discount program enables participating hospitals to provide pharmaceutical care to the nation’s most vulnerable patient populations and is critical to their continued operations, according to a new report on how hospitals use the program[1].
The study was written by Madeline Carpinelli Wallack and Suzanne Bailey Herzog, both former analysts at the U.S. Department of Health and Human Services Office of Inspector General (OIG). Commissioned by Safety Net Hospitals for Pharmaceutical Access (SNHPA), which represents more than 700 hospitals enrolled in 340B, it is thought to be the most thorough evaluation of how hospitals use 340B since the program’s inception.
During their tenure at OIG, Wallack and Herzog produced a series of landmark reports on 340B pricing, overcharges and oversight. Their 2005 report disclosing major deficiencies in 340B ceiling price information[2] was a factor in Congress’s decision to include strong 340B program integrity features[3] in last year’s historic health care reform legislation.
Helps Patients and Saves Money
Wallack and Herzog wrote that their findings demonstrate “the value of the 340B program to hospital systems in meeting the needs of their low-income, uninsured and underinsured patient populations while stretching tax dollars.”
“Safety-net hospitals have been using their program savings to provide, improve and expand services in innovative and cost-effective ways and will continue to rely on the program post-health care reform,” they wrote. “Without the 340B program, many safety-net hospitals would have to limit services or even close their pharmacy doors. As a result, patients would lose access to health care and communities would suffer.”
The study, entitled “Demonstrating the Value of the 340B Program to Safety Net Hospitals and the Vulnerable Patients They Serve,” is based on a late winter 2011 survey of more than 600 hospitals enrolled in 340B. It had a response rate of more than 60 percent.
The study found that hospitals save an average of $5.2 million per year by participating in the 340B drug discount program—a benefit that 85 percent say is “critical” to their operations and that virtually all others say is very important.
Ninety eight percent of the respondents said that they and their patients would suffer if the 340B program ceased to exist. Seventy seven percent said that uninsured and underinsured patients would see higher drug costs if 340B were eliminated, 74 percent said they would have to cut their pharmacy department staffs and 72 percent said they would have to reduce pharmacy services such as patient counseling and education.
Heightened Congressional Attention
Some members of Congress question whether the 340B program should be expanded in the post-health care reform era given that reform could result in tens of millions more Americans obtaining health insurance. The Affordable Care Act (ACA) directed the Government Accountability Office (GAO) to address that question in another major study of the 340B program[4] due to be released this fall.
Congress also asked GAO to address whether 340B hospitals and other covered entities use their savings from the program to advance the program’s objectives.
More than half of the hospitals that Wallack and Herzog surveyed said they have one or more outpatient pharmacies that fill prescriptions for their low-income patients. Of those, 74 percent said that 340B discounts allowed them to reduce the price of medications paid by patients, for example by providing drugs at no or reduced cost (86 percent), eliminating or reducing co-pays (40 percent) or reducing prices on a sliding scale (36 percent).
Sixty eight percent of the 340B hospitals said they rely on their savings to offset low pharmacy reimbursement from under-insured, Medicaid, or Medicare patients. Medicaid and Medicare reimbursements for pharmacy services often fail to adequately cover costs, the authors noted. One of the 340B program’s advantages is that its offers participants a lower acquisition cost relative to state or federal reimbursement limits.
“Because patients covered by public insurance programs make up the majority of these hospitals’ patient populations,” they wrote, “making up the difference through the advantages that the 340B program offers is vital to the continuity of operations.” That advantage will grow even more important, they added, given that health care reform is on course to expand Medicaid and Children’s Health Insurance Program enrollment by 16 million by 2019.
Expanded Access and Improved Service
The study also found that hospitals use their 340B savings to expand patient access to medicines and improve the quality of their pharmaceutical services. Of the 75 percent that said 340B helps them to increase patient access to prescription drugs, 93 percent said it did so by enhancing the pharmacy department’s or clinic’s ability to serve the uninsured or underinsured. Seventy one percent said 340B allows them to serve more patients, 67 percent said it helps them to maintain an adequate supply of inventory, and 64 percent said it allows them to have an outpatient pharmacy and keep it properly staffed.
Fifty four percent of the survey respondents said that 340B savings allow them to provide enhanced pharmacy services such as medication management therapy, patient assistance programs and disease management programs.
In addition to asking hospitals about how they use 340B, Wallack and Herzog inquired about difficulties they experience obtaining drugs at the 340B discounted price. Forty percent of the respondents said they had experienced this problem even though manufacturers are required to provide these discounts. Access to intravenous immunoglobulin (IVIG)[5] was “by far the primary issue,” the study noted.
Survey respondents also volunteered their opinions about two other hot topics in 340B circles: proposals to expand the drug discount to the inpatient setting, and the language in health care reform that prevents rural and cancer hospitals from buying orphan drugs at 340B-discounted prices.
Extending 340B to inpatient drugs can expand taxpayer savings, Wallack and Herzog observed. Fifty one percent of the survey respondents, they said, reported that their total inpatient drug expenditures exceeded their outpatient spending. Although the survey did not solicit hospitals’ input on the subject, many mentioned it as an important issue. Hospitals said they want the program extended to the inpatient setting to reduce costs and relieve them of administrative burdens. Legislation to extend 340B to these drugs is expected to be introduced in Congress soon.
Rural and cancer hospitals, meanwhile, voluntarily expressed their concern about a restriction, established under last year’s health reform law, which prevents them from accessing 340B discounts on expensive orphan drugs[6] used to treat rare diseases.
Program’s Importance Underscored
“The report underscores the importance of the 340B program to safety-net hospitals and the underinsured and uninsured patients they serve. Safety-net hospitals rely on 340B to provide improved access and quality of care to the vulnerable patients in their communities,” said Ted Slafsky, the executive director of SNHPA, the organization that commissioned the report.
“The 340B program is not only critical to the health care providers and their patients, it also translates into savings to taxpayers,” added SNHPA President and General Counsel William von Oehsen. “We urge Congress and other policymakers to keep this in mind as they work to solve our nation’s challenges in health care delivery, cost and access.”
Health Centers and 340B
The National Association of Community Health Centers (NACHC) also recently released a comparable survey report on the benefits of the 340B program for health centers[7].
“Consensus from responding health centers indicated that 340B has been very useful to the operation of their organization,” the report said. “When asked to rate the importance of 340B on a scale of 1-5, 96 percent of all respondents checked off a ranking of 4 or 5. Approximately 93 percent of responders believe 340B provides increased access to prescription drugs for their patients.”
Asked how access to prescription drugs has benefited their patients, the top four responses were:
“Support and enthusiasm for the 340B program is almost uniformly expressed in these responses,” the report’s authors concluded. “Responding health centers strongly believe 340B is vital to their health center operations and a key element to the improved health of the patients they serve.”
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