Panelists Evaluate Cost-Lowering Efficacy of 340B Discount Program

Panelists at the Academy of Managed Care Pharmacy (AMCP) Nexus meeting underscored the controversy surrounding the 340B Drug Pricing Program, including how the program has changed operationally over time and the gaps in research to understand the extent to which the initiative is working to lower costs.

The session began with a brief history of the 340B program, summarizing its formation in 1992 as part of the Public Health Services Act. The program requires manufacturers who sell covered outpatient drugs to other entities to charge a price that will not exceed an amount determined under a statutory formula. The average discount of list price may exceed 50% and varies across medications.

Entities that are eligible for the program include children’s hospitals, critical access hospitals, disproportionate share hospitals (DSHs), freestanding cancer hospitals, rural referral centers, and sole community hospitals, as well as several grant receivers and clinics (eg, Native Hawaiian health centers, sexually transmitted disease clinics, tuberculosis clinics).

In 1992, eligible entities were allowed to contract with a single pharmacy and the program was very simple, explained John M. O’Brien, PharmD, MPH, president and CEO of the National Pharmaceutical Council and member of the editorial board of The American Journal of Managed Care®. Since then, entities need to have relationships with multiple pharmacies as well as manufacturers, wholesalers, third party administrations, pharmacy benefit managers, and pharmacy switch vendors, creating a much more complicated system and controversy about program growth, certainty and clarity over how it works, lack of transparency into how it is working, and the financial impact to various stakeholders.

DSHs account for a large portion of 340B growth. Although 340B generated $52 billion in savings and revenue last year, about a $42 billion increase from 2015, DSHs accounted for 78% of that growth. However, there are many concerns about 340B transparency, making it difficult to conduct research for the program.

Donald E. Nichols, PhD, principal, health policy and systems research, Genentech, noted that there is no guidance on how discounts are translated into care for eligible patients and services, no requirement on how discounts are used, and no comprehensive understanding on whether the patient benefit portion of the program is working.

One study on patient discount sharing in the 340B program found that within the 1.4% of 340B-eligible pharmacy claims that used a 340B discount card, there was about a 92% decrease in patient out-of-pocket (OOP) costs, suggesting that discount sharing at point of sale at contract pharmacies is possible but most eligible patients are not directly benefiting from the program.

Another study on 340B eligibility expansion showed that by adopting a more liberal continuum of care approach, the model estimates a potential doubling of sales for branded 340B drugs while also raising questions about the branded vs generic drug purchasing behavior of 340B hospitals and clinics.

Nichols said that providers are concerned about providing more charity care, increases in drug quantities and varieties, and providing free vaccinations. However, empirical evidence has shown that there is mixed evidence on charity care, increases in medication access services, and no increases in total community benefit spending or uncompensated care.

He noted that more research is needed to better understand how patients benefit from 340B and whether discounts are systematically being passed to vulnerable patients via:

• Lower OOP costs
• Patient assistance programs
• Services for vulnerable patients
• Less aggressive pursuit of debt
• More appropriate care
• Greater medication adherence
• Better health outcomes

This article originally appeared in AJMC.