The 340B Drug Discount Program Controversy: 5 Things to Know


Among the many other significant changes the Patient Protection and Affordable Care Act contains for the healthcare industry, the healthcare law contains a provision expanding the 340B drug discount program to encompass a greater number of healthcare providers.

The program's expansion has proved contentious, with opponents of 340B alleging hospitals abuse the discount to increase profits. Hospitals have pushed back hard against the accusations, saying they use the program to expand care and increase patients' access to medication. Here are five key things to know about 340B and the controversy surrounding it.

1. The 340B program allows nonprofit hospitals, community health centers, hemophilia treatment centers, HIV/AIDS clinics and other similar facilities that serve a large proportion of under- or uninsured patients to purchase medications from manufacturers at reduced prices.

2. The PPACA expanded the program to include providers such as critical access hospitals, freestanding non-prospective payment system cancer hospitals, sole community hospitals, certain non-PPS children's hospitals and rural referral centers with disproportionate share adjustments equal to or greater than 8 percent.

3. During the past year or so, the program has faced fierce criticism from various groups and healthcare industry stakeholders who claim it opens the door for abuse by hospitals. For instance, last summer, Scott Gottlieb, MD, wrote an opinion piece published by The Wall Street Journal alleging hospitals are buying drugs at a discount through the program, charging insurers the full price and then pocketing the difference. Additionally, before the publication of Dr. Gottlieb's piece, a collection of pharmaceutical and biotechnology associations released a whitepaper that raised concerns about the program leading to harmful consequences for patients. In March of this year, the Alliance for Integrity Reform of 340B — a coalition of patient advocacy groups, healthcare providers and biopharmaceutical industry members — joined the chorus criticizing the program by releasing an analysis claiming more than two-thirds of hospitals that receive 340B discounts provide less charity care as a percent of patient costs than the national average of 3.3 percent for all hospitals.

4. Groups such as American Hospital Association and the Safety Net Hospitals for Pharmaceutical Access have vehemently defended 340B. In response to the Alliance for Integrity Reform analysis, for instance, the AHA responded that the report "ignores the fact that the 340B program enables hospitals to provide essential healthcare services to the nation's most vulnerable populations." Additionally, last year, Ted Slafsky, president and CEO of SNHPA, along with Bruce Siegel, MD, president and CEO of America's Essential Hospitals (formerly the National Association of Public Hospitals and Health Systems) and Maggie Elehwany, vice president of government affairs and policy for the National Rural Health Association, hosted a telebriefing to raise awareness of the importance of the program. They said 340B saves taxpayers money by decreasing government expenditures on pharmaceuticals and benefits patients by supporting hospitals that care for the neediest patients. 

5. Currently, the battle over the expansion of 340B looks to be favoring opponents of the drug discount program in the realm of "orphan" drugs. In late May, U.S. District Judge Rudolph Contreras ruled against HHS in a suit challenging a final rule from the agency expanding the 340B drug discount program to rural and cancer hospitals as outlined in the PPACA. The Pharmaceutical Research and Manufacturers of America filed the suit, seeking to exclude all drugs with an "orphan" designation — a drug that has been developed specifically to treat a rare condition and often carries a hefty price tag — from the final rule. Judge Contreras ruled in favor of PhRMA, finding that HHS does not have the authority to implement regulations implementing PPACA 340B provisions. The ruling was a major blow to SNHPA and the AHA, which supported HHS in the suit.

More Articles on the 340B Drug Discount Program:
Judge Rules Against HHS in 340B Drug Discount Suit
Alliance for Integrity Analysis Questions 340B Hospitals' Charity Care  
AHA: Court Should Reject 340B Orphan Drug Challenge 


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