In an effort to offset cost increases associated with the Affordable Care Act (ACA), the Obama administration intends to expand hospitals' access of the 340B discount drug plan. While the expansion may sound promising to some, many others worry that the program will threaten the quality of care, as increased participation risks higher potential for abuse. Even worse, the 340B program will likely rise the cost of cancer care.
In an effort to offset cost increases associated with the Affordable Care Act (ACA), the Obama administration intends to expand hospitals’ access of the 340B discount drug plan. While the expansion may sound promising to some, many others worry that the program will threaten the quality of care, as increased participation risks higher potential for abuse. Even worse, the 340B program will likely rise the cost of cancer care.
Only weeks ago The American Journal of Managed Care reported that the 340B program was already under fire due a report that suggested many participating hospitals were misusing the program. Critics advised that the program had grown too greatly, allowing some hospitals to upsell discounted drugs to Medicare patients and private insurers. This practice unfairly affected those who were supposed to benefit most from the program.
Originally created in 1992 under President George H. W. Bush, the 340B law requires pharmaceutical manufacturers to provide discounted medications to hospitals, specifically those like safety net facilities that provide care to large populations of low-income patients. Drug makers are encouraged to participate, because if they refuse, they are denied Medicaid reimbursements for any products they distribute. Discounts are intended to be passed on to under or uninsured patients who otherwise cannot afford their medicines at full price.
“[The] 340B [program] is not about drug discounts for disadvantaged patients,” Bruce Siegel, MD, MPH, president and CEO of America’s Essential Hospitals, said. “It is about helping hospitals stretch scarce resources to cover more and better care for their patients. Discounted drug purchases allow hospitals to devote more resources to care for the neediest, most vulnerable patients.”
However, abuse of the program under the ACA is only expected to grow. Hospitals like Duke University Health System madea profit of $76.9 million off the discount program, when only about 5% of their 340B program patients were uninsured. Because the program will now include cancer center coverage under the health reform act, eligible hospitals are buying private oncology practices in order to obtain expensive cancer drugs at a discount. Moving cancer prescriptions under the 340B program can generate an additional $1 million profit for hospitals, but mean little in savings for cancer patients.
This shifting of care also means that more patients are seeking treatment in hospitals, driving up Medicare payments towards hospitals, and reducing those made to private practices. Between 2005 and 2011, chemotherapy delivery in doctor’s offices fell 20%, while the share of Medicare payments for hospital-delivered chemotherapy increased nearly 30%.
“The 340B program doesn't print free money. The cost of the discounts are foisted onto patients and insurers, who are forced to pay higher prices that drug makers establish to offset the cost of the forced discounts,” wrote Dr Scott Gottlieb, a physician and resident fellow at the American Enterprise Institute.
Around the Web
Obamacare Raising Cancer Care Cost [CNBC]
The 340B Program and Healthcare Reform [AJMC]
On ObamaCare's Push for Hospital Cancer Treatment [Wall Street Journal]
340B program works as intended
340B Program Works as Intended [Modern Medicine]
Scott Gottlieb: How ObamaCare Hurts Patients [Wall Street Journal]