Drug lobby questions whether hospitals' 340B savings are benefiting patients

Hospitals that receive funding through the 340B drug-pricing program are reimbursed for physician-administered drugs at a rate three times more than what they pay to acquire them, according to a study released Dec.16 by Seattle-based consulting firm Milliman, and the drug lobby behind the study is questioning whether those savings are being passed on to the patients they were meant to benefit.

The 340B program gives qualifying hospitals an average of 25 percent to 50 percent discounts on drugs to help them provide care to vulnerable or uninsured patients. But the program allows hospitals to benefit financially without providing better care for patients, according to the study, commissioned by the Pharmaceutical Research and Manufacturers of America, the drug industry's top lobbying group. 

The study said that hospitals pay on average $1,591 per claim for a brand-name drug, then submit a claim to a commercial insurer and receive an average of $4,673 as reimbursement. 

"In order to lower patients' out-of-pocket costs, we must address misaligned incentives in the health care system, like the 340B program, that enable hospitals and others in the supply chain to profit without any assurances that patients see any benefit," said Stephen Ubl, president and chief executive officer of PhRMA.

Hospitals are not required to report to the government how they are using their 340B savings to help patients, so PhRMA argues there is little evidence that hospitals are using 340B savings to provide improved care. 

"It is clear that far too many hospitals are taking advantage of a program meant to improve care provided to low-income, vulnerable patients," Mr. Ubl said. 

However, the American Hospital Association argued in a statement sent to Becker's Hospital Review that the report is "an obvious attempt to divert attention away from a problem of their own making: skyrocketing drug prices." 

Tom Nickels, AHA executive vice president, said many programs and services provided by 340B hospitals would not be possible without funding from the program. 

"It is time for drug companies to stop attacking others and come to the table with solutions on how to rein in their out-of-control prices," Mr. Nickels said.

Read the full news release here

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