JustCare

Tag: 340B program

  • Hospital 340B program fails low-income communities

    Hospital 340B program fails low-income communities

    Katie Thomas and Jessica Silver-Greenberg report for The New York Times on how a big non-profit hospital system took money that should have been funneled into patient care in a low-income community and used it to boost its profits. It leaves one to wonder why Medicare ever would pay hospitals and other entities upfront and allow them to decide how to spend it–as it is now doing through its direct contracting experiment–rather than paying hospitals and other entities for the services they deliver.

    Bon Secours Mercy Health generated tens of millions of dollars in profits through a federal drug discount program that allows it to get drugs at a very low rate and charge health insurers the going rate for them. This 340B drug discount program is available only to hospitals serving people with low incomes. In exchange, Bon Secours is supposed to take the revenue it generates and allocate it to improving its facilities and care for low-income patients.

    But, Bon Secours had other visions for what to do with the profits it generated in a low-income community. It chose not to invest in an ICU, up-to-date medical equipment or certain types of specialists. Rather, it cut staffing and forced its patients needing specialty care to wait extended periods for appointments outside their community, putting them at risk. It invests a lot of its profits in its facilities serving wealthier populations.

    Bon Secours and patients at its facilities serving wealthier patients benefit enormously from the federal government’s 340B program. The 340B law was intended to give non-profit hospitals serving poor patients in low-income communities an extra injection of cash through access to highly discounted drugs that could be charged to insurers at higher cost. But, the law does not require hospital systems to report how they spend their profits, much less to take the revenue they generate from this program and invest it in their hospitals serving poor patients. And, the New York Times indicates that many hospital systems are not making these investments.

    Moreover, non-profit hospital systems have used loopholes in the law to create clinics in wealthy communities, which are legally outposts of their facilities in low-income neighborhoods. As a result they can benefit from the 340B program at these clinics as well. The financial benefits can be enormous.

    For one example, the cost of Keytruda, a cancer drug, is around $3,444 under the 340B program. But, private insurers will pay $25,425 for that drug. A hospital profits more than $21,000 on one vial of this drug alone.

    In a fair and decent US, all hospitals and all patients would benefit from fairly priced drugs, and pharmaceutical companies would not be able to gouge patients, insurers and hospitals. Drug prices set at the price other wealthy countries pay would bring down health care costs considerably, making health care more affordable for everyone.

    It’s a travesty that in the richest nation in the world, even health care programs designed to help non-profit hospitals help poor communities are not serving poor community needs.

    Here’s more from Just Care:

  • New York sues CVS for depriving safety net hospitals of millions of dollars

    New York sues CVS for depriving safety net hospitals of millions of dollars

    If you think that corporate health care, be it administered by UnitedHealth, Amazon or CVS, is better than government health care, consider what’s happening in our health care system today. More and more Wall Street firms are buying up bigger and bigger pieces of the health care industry and, each time they do, it puts health care in the US on less sure footing. New York’s Attorney General is suing CVS to prevent it from depriving safety net hospitals of millions of dollars, undermining their ability to care for their patients and survive, Paige Minemyer reports for FIERCE Healthcare.

    According to Letitia James, NY’s Attorney General, some of New York’s hospitals serving low-income vulnerable populations lost millions of dollars in prescription drug discounts under their 340B programs because of CVS. As CVS has grown, it allegedly exercised its power over these hospitals to make them work with its subsidiary, Wellpartner in order to get 340B drug discounts. In the process, CVS made it harder for these hospitals to get the discounts. As a result, the hospitals had less money to care for their patients.

    According to James, “CVS’s actions are a clear example of a large corporation using its clout and power to take advantage of institutions and vulnerable New Yorkers, but my office will not allow it. We are taking action to stop CVS’s harmful practices and recoup critical funds to improve health care for our communities. When powerful corporations undermine the health and wellbeing of vulnerable communities in New York, they can expect to hear from my office.”

    CVS bought Wellpartner five years ago. It then told hospitals that in order to provide them with prescription drugs, they would have to use Wellpartner to oversee their 340B programs. James alleges that this requirement violates New York State antitrust laws.

    CVS denies the charges. It claims it has saved New York more than $200 million on prescription drugs and made it easier to get prescription drugs through the 340B program. Of course, it does.

    Here’s more from Just Care:

  • Pharmaceutical companies put low-income patients at risk

    Pharmaceutical companies put low-income patients at risk

    If you have been reading Just Care, you likely already know that Medicare only covers about half of a typical person’s health care costs and, unless you also qualify for Medicaid, you might struggle to afford critical health care. Out-of-pocket health care costs present a huge barrier to care for millions of older adults and people with disabilities as well as millions of younger Americans with low incomes. Pew Trusts describes a worsening situation for low-income patients as drug manufacturers fail to participate as much in a federal drug discount program–the 340B program–and, in the process, make it harder for physicians and hospitals to treat low-income patients and for low-income patients to get needed medicines.

    Doctors, clinics and hospitals are at risk of not being able to survive financially with the loss of drug manufacturers providing them with discounts on drugs under the federal 340B discount drug program. Some hospitals are losing millions of dollars a year. They cannot afford to pay staff or treat as many patients without insurance.

    Lots of people are blaming the pharmaceutical companies, which certainly should be blamed for lacking the compassion to provide the drug discounts to people in need. But, they are businesses that are obligated to return as large profits as possible to their shareholders. And, they claim that some hospitals are profiteering off the drug discounts they receive from the 340B program.

    But, pharmaceutical corporations continue to make out like bandits in the US.  And, the real culprit here is Congress and state governments, which give these drug corporations the power to charge whatever they please.

    Just two states, Arkansas and Michigan, have passed laws that require pharmaceutical companies to continue the 340B discounts for prescriptions patients fill at 340B pharmacies.

    Since 2020, 17 pharmaceutical companies have ended or reduced their participation in the 340B program. Sometimes they ended contracts with hospitals. Sometimes they ended contracts with clinics. And, sometimes they ended all contracts.

    They say that they object to the fact that some people with higher incomes, who should not be eligible for the discounts, benefit from the program. If it weren’t terrible that they are pulling back, it would be almost laughable that the reason is that they don’t have claims-level data on who is benefiting from the program. Pharmaceutical companies are notorious for keeping the vast majority of their data proprietary, not open to public scrutiny.

    For their part, the safety net providers say it is administratively burdensome to collect this data, and it could be an infringement of patient privacy. At the same time, without the discounts, many health clinics report that a large portion of their patients will be forced to forgo insulin and other critical medicines.

    The drug companies benefit if they participate in the 340B program because the federal government then covers their drugs in Medicaid. But, that is apparently not enough to keep them in.

    The Health Resources and Services Administration, an arm of the US Department of Health and Human Services, oversees the program. Patients can get discounts at 340B pharmacies as high as 50 percent. The drug manufacturers point to a GAO report finding some violations by safety-net providers, as the reason they are pulling out of the program. But these violations represent only a tiny fraction of the total use.

    The Biden administration says that the drugmakers that have pulled out are violating their government contracts. HHS has referred them to the Office of the Inspector General and plan to impose financial penalties on them. But, it has not suggested that it would take their drugs off of Medicaid formularies.

    The pharmaceutical companies are suing to protect themselves from penalties. About half of all states’ attorneys general are siding with the federal government.

    Here’s more from Just Care:

  • Why doesn’t HHS penalize pharmaceutical companies for disregarding rules requiring drug discounts at hospitals?

    Why doesn’t HHS penalize pharmaceutical companies for disregarding rules requiring drug discounts at hospitals?

    It’s not surprising that pharmaceutical companies are disregarding the rules for discounting drug prices at hospitals serving low-income populations. What is concerning is that HHS has done nothing to penalize them about this violation. Now, Ed Silverman, STAT, reports that at least 25 state attorneys general are suing HHS to penalize the drug companies.

    The discounts the pharmaceutical companies are supposed to offer are part of a federal program–340B–to ensure that hospital patients with low incomes can afford their outpatient drugs. About 12,700 hospitals participate in the program.

    But, pharmaceutical companies do not like it when hospitals do not dispense these drugs themselves. Many hospitals send the drugs to retail pharmacies for pickup or delivery. As a result, drug companies do not see patient claims data.

    Many advocates argue that the drug companies are violating federal law. At the same time, the pharmaceutical companies are making it harder for low-income populations to get needed drugs, in the middle of a pandemic, no less.

    The attorneys general say that the drug companies have no authority to make these data demands.  HHS should not allow them to flout the law. Pharmaceutical companies that are denying hospitals 340B discounts include Novartis, Eli Lilly, AstraZeneca, Novo Nordisk, Sanofi and United Therapeutics.

    Republicans and Democrats support the 340B drug discount program. But, the agency at HHS in charge of overseeing the 340B program, said it did not have the authority to enforce the discounts. Since then, hospitals and hospital pharmacists have sued HHS for not acting.

    PhRMA, the trade group that represents the pharmaceutical companies, argues that the 340B program does not have the force of law.

    Here’s more from Just Care:

  • Higher drug prices for rural hospitals keep them from providing critical care

    Higher drug prices for rural hospitals keep them from providing critical care

    Sarah Tribble reports for Kaiser Health News that particularly high drug prices for rural hospitals can keep them from providing critical care. For no clear reason, the ACA prevents rural hospitals from negotiating prescription drug discounts for many expensive drugs, as larger hospitals can do. Instead, rural hospitals must pay full price for “orphan drugs” that treat rare diseases and also may treat many common conditions.

    The ACA prevents rural hospitals from participating in a federal drug discount program–the 340B program–intended to ensure that low-income patients receive needed hospital care. Instead, rural hospitals are often forced to pay many times more for a costly medication than other hospitals.

    Many blockbuster drugs can be designated as orphan drugs, under the Orphan Drug Act, so long as they also treat rare diseases. So, rural hospitals are struggling to pay for the high-cost drugs that treat patients with rare diseases as well as patients with their common conditions. There are literally thousands of drugs designated as orphan drugs.

    Without the benefit of a discount, rural hospitals are hard-pressed to stock orphan drugs, leaving patients with urgent and emergency stroke, cancer and other needs without needed care. For example, a single dose of the stroke medication, Activase, cost one rural hospital $8,010 and the larger hospital $1,600. 340B program discounts are often significant, according to a GAO report.

    In fact, having to pay high prices for orphan drugs is forcing some rural hospitals to close entire hospital units. Consequently, patients needing these drugs must travel far from home to get needed care that their local hospital should be able to provide.

    No one is taking responsibility for the ACA exclusion of orphan drugs from the 340B program for rural hospitals. The provision was never even discussed in Congress but somehow slipped into the legislation. That said, Pharma invested heavily in ensuring that rural hospitals were denied drug discounts for rare disease drugs after the ACA was passed.

    Here’s more from Just Care:

  • Federal drug discount program likely hurts cancer patients

    Federal drug discount program likely hurts cancer patients

    Almost half the hospitals in the U.S. that treat Medicare patients, participate in the federal government’s 340B program, designed to provide discounts to safety net health providers and increase services to underserved patients. Through participation in the program, hospitals save as much as 25 to 50 percent on outpatient drug costs so that they can provide more services and/or provider more charity care and serve more patients. The GAO and others have found this federal drug discount program likely hurts cancer patients and increases Medicare costs.

    One recent study found that the majority of 340B hospitals provide less charity care than the national average. It also appears that the drug companies make money off 340B programs even though the program requires substantial discounts on cancer drugs by raising prices more than the discounts offered.

    Specifically, the GAO report found that per person cancer drug spending for people with Medicare was more than twice as high in 340B hospitals than in non-340B hospitals. And, from this, GAO concluded that 340B hospitals either prescribe more cancer drugs or more expensive drugs than non-340B hospitals. This is not surprising given that the 340B program provides hospitals a financial incentive to spend more on cancer drugs; the 340B program is a profit center for them.

    The GAO raises three main concerns: 1. How to ensure the 340B hospitals are providing appropriate treatment to cancer patients; 2. How to protect these cancer patients from being liable for higher drug copays than they should be paying because their drug costs are higher? and 3. How to reduce unnecessary Medicare spending?

    HHS, which oversees the 340B program suggests that patient outcomes may differ–and may be better–in the 340B programs. But, the GAO concludes otherwise.

    Here’s more from Just Care: