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Consequences of the 340B Drug Pricing Program.

ABSTRACT: The 340B Drug Pricing Program entitles qualifying hospitals to discounts on outpatient drugs, increasing the profitability of drug administration. By tying the program eligibility of hospitals to their Disproportionate Share Hospital (DSH) adjustment percentage, which reflects the proportion of hospitalized patients who are low-income, the program is intended to expand resources for underserved populations but provides no direct incentives for hospitals to use financial gains to enhance care for low-income patients.We used Medicare claims and a regression-discontinuity design, taking advantage of the threshold for program eligibility among general acute care hospitals (DSH percentage, >11.75%), to isolate the effects of the program on hospital-physician consolidation (i.e., acquisition of physician practices or employment of physicians by hospitals) and on the outpatient administration of parenteral drugs by hospital-owned facilities in three specialties in which parenteral drugs are frequently used. For low-income patients, we also assessed the effects of the program on the provision of care by hospitals and on mortality.Hospital eligibility for the 340B Program was associated with 2.3 more hematologist-oncologists practicing in facilities owned by the hospital, or 230% more hematologist-oncologists than expected in the absence of the program (P=0.02), and with 0.9 (or 900%) more ophthalmologists per hospital (P=0.08) and 0.1 (or 33%) more rheumatologists per hospital (P=0.84). Program eligibility was associated with significantly higher numbers of parenteral drug claims billed by hospitals for Medicare patients in hematology-oncology (90% higher, P=0.001) and ophthalmology (177% higher, P=0.03) but not rheumatology (77% higher, P=0.12). Program eligibility was associated with lower proportions of low-income patients in hematology-oncology and ophthalmology and with no significant differences in hospital provision of safety-net or inpatient care for low-income groups or in mortality among low-income residents of the hospitals' local service areas.The 340B Program has been associated with hospital-physician consolidation in hematology-oncology and with more hospital-based administration of parenteral drugs in hematology-oncology and ophthalmology. Financial gains for hospitals have not been associated with clear evidence of expanded care or lower mortality among low-income patients. (Funded by the Agency for Healthcare Research and Quality and others.).

SUBMITTER: Desai S

PROVIDER: S-EPMC6073067 | biostudies-literature | 2018 Feb

REPOSITORIES: biostudies-literature

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Consequences of the 340B Drug Pricing Program.

Desai Sunita S McWilliams J Michael JM

The New England journal of medicine 20180124 6

<h4>Background</h4>The 340B Drug Pricing Program entitles qualifying hospitals to discounts on outpatient drugs, increasing the profitability of drug administration. By tying the program eligibility of hospitals to their Disproportionate Share Hospital (DSH) adjustment percentage, which reflects the proportion of hospitalized patients who are low-income, the program is intended to expand resources for underserved populations but provides no direct incentives for hospitals to use financial gains ...[more]

PMID: 29365282

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Project description:ImportanceThe federal 340B program lowers the acquisition cost of prescription drugs and places no limits on what hospitals charge payers. Congress established the program to allow 340B profits (the difference between payments and acquisition costs) to subsidize other safety-net services. Little is known about the magnitude of revenues and profits from the 340B program among participating hospitals.ObjectiveTo report revenues and estimated profits from the 340B program that hospitals collect from Medicare and Medicare beneficiaries for outpatient clinic administration of prescription drugs covered under Medicare Part B.Design, setting, and participantsThis cross-sectional descriptive study used 100% Medicare outpatient Part B claims from January 1, 2013, to December 31, 2016, from fee-for-service Medicare beneficiaries administered separately payable drugs at general acute care nonprofit or public hospitals without special payment designations. Claims data (N?=?11?298?860) were aggregated to the hospital-year level (N?=?6000) and linked to hospital finances and 340B participation from Medicare cost reports and the 340B covered entity list.Main outcomes and measuresOutcomes studied were revenue and estimated profits, assuming a 50% discount from 340B-discounted drug administrations to Medicare patients, as well as Medicare 340B profits relative to hospital net operating revenue, uncompensated care, and disproportionate share hospital payments.ResultsDuring the study period, hospitals received approximately $2.1 billion in 340B revenue from Medicare in 2013, increasing to $3.7 billion in 2016. Estimated 340B profits from Medicare in 2016 totaled $1.9 billion, and per-hospital estimated 340B profits were $2.5 million but exhibited variability (median, $0.8 million; interquartile range, $0.1 million-$2.8 million). In 2016, median estimated 340B profits from Medicare were 0.3% (interquartile range, 0.1%-0.7%; mean, 0.4%) of hospital operating budgets and 9.4% (interquartile range, 1.8%-26.5%; mean, 16.6%) of hospital uncompensated care costs.Conclusions and relevanceEstimated profits that hospitals derived from administering 340B-discounted drugs to Medicare patients are small compared with operating budgets yet substantial compared with uncompensated care costs for many hospitals. Revenue and profit estimates from 340B-discounted drugs represent a lower bound because data on revenue from the sale of outpatient retail dispensed drugs by hospital contract pharmacies and commercial insurer claims are not available.

Project description:ImportanceCritics of the federal 340B Drug Pricing Program raised concerns that the program might provide financial incentives for participating hospitals to prescribe more and/or more expensive drugs because the revenue generated from Medicare reimbursement exceeds the purchase price by a substantial margin. Studies showing higher Medicare Part B drug spending at hospitals that are 340B hospitals, which can purchase outpatient drugs from manufacturers at discounted prices, compared with non-340B hospitals were used by the Centers for Medicare & Medicaid Services to justify their 340B payment policy that reduced Medicare payments for drugs in the 340B program in 2018 and thereafter. The Centers for Medicare & Medicaid Services attributed higher spending to the 340B benefit and believed that payment cuts would reduce the financial incentives associated with higher spending. However, the lack of sufficient risk adjustments is a significant concern of study validity.ObjectiveTo examine whether per-beneficiary Medicare Part B drug spending is significantly different between 340B and non-340B hospitals while adequately controlling for patient-level and hospital-level risk factors.Design, setting, and participantsA cross-sectional study was conducted from October 1, 2020, to May 30, 2021, using 2017 administrative claims data from a random 5% sample of Medicare fee-for-service beneficiaries. Included beneficiaries had at least 1 separately payable non-pass-through drug claim in 2017, were fully enrolled in Part A and Part B through 2017, and did not die in 2017.Main outcomes and measuresThe outcome was separately payable Part B drug spending.ResultsThe sample included 35 364 beneficiaries (21 825 women [61.7%]; 29 996 White patients [84.8%]; mean [SD] age, 70.6 [12.0] years) and 2446 hospitals. A total of 918 hospitals (37.5%) were in the 340B program and 938 hospitals (38.3%) were teaching hospitals. There was a higher percentage of teaching hospitals among 340B hospitals (517 of 918 [56.3%]) than non-340B hospitals (421 of 1528 [27.6%]), and beneficiaries who went to 340B hospitals were more likely to be non-White than those who went to non-340B hospitals (3360 of 19 139 [17.6%] vs 1583 of 13 710 [11.5%]). The Part B drug spending difference between 340B and non-340B hospitals was not statistically significant after controlling for beneficiary-level risk factors and hospital-level characteristics ($568; 95% CI, -$283 to $1419; P = .19).Conclusions and relevanceThe results show that the differences in patient population and hospital-level characteristics may explain drug spending differences between 340B and non-340B hospitals, which raises doubt about the financial incentive theory of the 340B program drug discount and the justification for the Centers for Medicare & Medicaid Services's 340B payment policy.

Project description:ObjectiveWe aimed to determine the association between the stepwise increase in the sustained viral response (SVR) and Swiss and United States (US) market prices of drug regimens for treatment-naive, genotype 1 chronic hepatitis C virus (HCV) infection in the last 25 years. We identified the following five steps in the development of HCV treatment regimens: 1) interferon (IFN)-? monotherapy in the early '90s, 2) IFN-? in combination with ribavirin (RBV), 3) pegylated (peg) IFN-? in combination with RBV, 4) the first direct acting antivirals (DAAs) (telaprevir and boceprevir) in combination with pegIFN-? and RBV, and 5) newer DAA-based regimens, such as sofosbuvir (which is or is not combined with ledipasvir) and fixed-dose combination of ritonavir-boosted paritaprevir and ombitasvir in combination with dasabuvir.DesignWe performed a linear regression and mean cost analysis to test for an association between SVRs and HCV regimen prices. We conducted a sensitivity analysis using US prices at the time of US drug licensing. We selected randomized clinical trials of drugs approved for use in Switzerland from 1997 to July 2015 including treatment-naïve patients with HCV genotype 1 infection.ResultsWe identified a statistically significant positive relationship between the proportion of patients achieving SVRs and the costs of HCV regimens in Switzerland (with a bivariate ordinary least square regression yielding an R2 measure of 0.96) and the US (R2 = 0.95). The incremental cost per additional percentage of SVR was 597.14 USD in Switzerland and 1,063.81 USD in the US.ConclusionThe pricing of drugs for HCV regimens follows a value-based model, which has a stable ratio of costs per achieved SVR over 25 years. Health care systems are struggling with the high resource use of these new agents despite their obvious long-term advantages for the overall health of the population. Therefore, the pharmaceutical industry, health care payers and other stakeholders are challenged with finding new drug pricing schemes to treat the entire population infected with HCV.

Project description:BackgroundPharmaceutical spending has been increasing rapidly for years and is higher than ever before. To control the rising costs, countries are implementing regulatory frameworks such as (internal) reference pricing, price cuts or generics substitution. Internal reference pricing establishes a reference price within a country which serves as the maximum level of reimbursement for a group of pharmaceuticals. Price setting in the German market is especially relevant for many European countries, which use Germany as a reference country for their own price setting.MethodsWe evaluate pharmaceutical price dynamics for not reference priced pharmaceuticals (NRPs) as well as for reference priced pharmaceuticals (RPs) in Germany-referring to the internal reference price system. 64,862 medication packs have been extracted from the German pharmaceutical pricing register Lauer-Taxe. For each pack, we extracted detailed data on the company, manufacturer rebates, pharmacy retail prices, reference prices, co-payments, import quotas, and discount agreements. We then investigated price setting and dynamics of NRPs vs. RPs for all 14 indication areas by ATC code level 1.ResultsThe average manufacturer price per pack was 604.84€ for NRPs and 112.11€ for RPs. Similar differences were found for the wholesale price and the pharmacy retail price. The reference price was-as expected-0.00€ for NRPs, and 154.40€ for RPs. NRP packs were imported in 42.38%, while RP packs were imported only in 24.62%. Highest average pharmacy retail prices could be found in the therapeutic areas 'antineoplastic and immunomodulating agents' (1711.47€), 'systemic hormonal preparations' (1331.95€), and 'blood and blood forming organs' (1260.58€). We detected high fluctuations in pharmacy retail prices per indication, as well as for reference prices per indication. The indications with the highest number of reference price regulated medical packs are 'cardiovascular system', 'musculo-skeletal system', and 'nervous system'. Highest co-payments were found in the indications 'antineoplastic and immunomodulating agents', 'blood and blood forming organs', and 'antiinfectives for systemic use'.ConclusionPrice setting and price dynamics vary substantially between NRP and RP medication packs. Further, we saw major differences across all indication areas as well as when comparing medication packs launched by top 20 pharma companies vs. the rest.

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Consequences of the 340B Drug Pricing Program.

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Consequences of the 340B Drug Pricing Program.

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