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“Controversy Continues to Swirl Around the 340B Program”

To Be or Not To 340B By Alyce C. Katayama

Although the 340B program accounts for only two percent of over $300 billion in annual drug purchases in the US, there continues to be a lot of ink spilled over the question of whether the 340B program is serving its legislative intent of stretching federal resources to reduce drug costs and expand health services to appropriate patients. It is true that the program has grown and changed since 2004. The proponents argue that that growth does not reflect abuse or inappropriate use but is rather the intended result of the Medicare Modernization Act and other legislation which has expanded the program so that presently it covers six types of hospitals. Almost a third of US hospitals can now access the program for covered outpatient prescription drugs. Drug spending covered by the program is expected to grow.

As far back as 2011, the Government Accountability Office found program oversight to be inadequate.

Adding fuel to the fire, a recent study published in the influential journal, Health Affairs, (October 2014) by Rena Conti, University of Chicago, and Peter Bach, Memorial Sloan Kettering Cancer Center, concluded that there was support for the criticism that the 340B program is being converted from one that serves vulnerable patient populations to one that enriches hospitals and their affiliated clinics. That study by Conti and Bach found that in addition to significant growth in the number of newly registered 340B Disproportionate Share hospitals, there had been “exponential growth” in the number of outpatient clinics affiliated with such hospitals since 2004. The study examined whether those expansions were associated with a shift way from the program’s focus on low income and uninsured populations.

The authors suggest the need for further assessment of whether the activities of 340B hospitals and their affiliated clinics are benefitting the populations originally targeted by the law. They suggest there is at least some evidence that 340B hospitals have tended to affiliate with more remunerative specialty outpatient practices, such as those in oncology that heavily use expensive prescription drugs. They found some data to support the hypothesis that 340B drug purchases were concentrated among oncology outpatient practices affiliated with hospitals where the potential for profit is significant.

It remains true that no comprehensive national assessment of this issue has been done and few data are available. The debate will continue as manufacturers, safety net providers and politicians continue to weigh in on the facts and fictions regarding the 340B program.

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