340B Controversy Jeopardizes Patient Access

February 3, 2014

by Amanda Conschafter, Blog Editor

When big hospitals profit by gaming a government program, public confidence wanes – and patient access could suffer. That’s the concern with the 340B program, whose misuse has skyrocketed in recent years and now threatens to worsen under the Affordable Care Act.

What is 340B? How did it go off track? And how will it affect patient care?

Section 340B of the Public Health Service Act, crafted by Congress in 1992, was well intentioned. Congress sought to offset costs for hospitals that treat a disproportionate amount of uninsured or indigent patients by requiring pharmaceutical companies to give these hospitals a 25-50 percent discount on medications. The hospitals continue to bill Medicaid and privately insured patients at full price, creating a profit intended to offset the cost of care for the underserved.

But using the 340B discounts to boost hospitals’ bottom line quickly caught on – even at hospitals with only a small percentage of uninsured patients. Critics argue that the program encouraged hospitals to increase the number of drugs they prescribed – and, allegedly, to essentially recruit patients suffering from cancer and other conditions that require costly medications, which the hospital purchased at a discount.

Now the Affordable Care Act could exacerbate the issue. In addition to expanding Medicaid coverage, which effectively increases the number of hospitals that qualify for 340B, ACA expands the program to several new types of hospitals, such as cancer and rural health centers.

And ACA guidance allows hospitals to partner with pharmacies to distribute medications.

Loose oversight has led to abuse of pharmacy partnerships, and pharmaceutical companies have responded by buckling down on cancer drug distribution.

Which brings us back to the indigent patients themselves. Program abuse has complicated patients’ access to needed medications already. But what’s to come for these patients in need when 340B abuse inevitably sparks public outcry and prompts government reform?

Though the program designed to help these patients allowed too many hospitals to pad their profit margins, the patients’ need for care remains legitimate – and often dire. To curb abuse without sacrificing the needs of the underserved, policymakers must consider how to refocus both public attention and the 340B program on needy patients.

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