The federal government recently released information on the total purchases that hospitals, health centers, and clinics made through the 340B drug pricing program in 2022. The Health Resources & Services Administration (HRSA) reported that these purchases reached $53.7 billion, meaning 340B covered entities spent $9.8 billion more on 340B drugs than they did in 2021. This release provided an opportunity to take a closer look at why that figure increased.

Putting 340B Purchases in Perspective

In addition to understanding the drivers behind the 340B purchase figures, it is important to understand what the HRSA totals mean. The purchase totals pertain to the tens of billions of dollars that drug companies take into their coffers for selling 340B-eligible drugs. They do not quantify how much hospitals received in savings for those discounted drugs, as implied by some drug industry critics of 340B.

It is not at all a given that an increase in the amount of 340B purchases translates into a corresponding increase in 340B savings. The 340B value depends on both the price of each drug and the 340B discount for that drug. These are factors that hinge on whether a drug is brand-name or generic, how the drugmaker has hiked prices over time, and what drug discounts the company has offered other payers.

With the understanding of how 340B purchases differ from discounts, one can turn to the key reasons why drugmakers are selling more of these drugs each year.

A Continued Shift Toward Outpatient Care

A major element behind total 340B drug purchases has nothing to do with how hospitals use 340B. Instead, it reflects a continued shift away from providing hospital care in the inpatient setting.

In recent years, hospital outpatient revenue exceeded inpatient revenue for the first time. This was the latest development in a trend that accelerated during the COVID-19 pandemic.

Other research notes that the shift toward outpatient care – and the use of 340B-eliglble drugs that go along with it – are due to several key reasons. They include advances in outpatient care and technology, changes in reimbursement for care, and patient preferences.

High Prices for New Drugs

Other big drivers of 340B purchases are the often-astronomical prices that drugmakers set for new products that they are bringing to market. High prices are an issue because the 340B discount for new brand-name drugs is 23.1%, meaning hospitals are paying more than three-quarters of those starting prices. Drugs that have been on the market for years and have undergone large price hikes have deeper 340B discounts.

A recent study found that net launch prices for new drugs skyrocketed from a median of $1,376 in 2008 to $159,042 in 2021. Recent launch prices for individual drugs have been so high in several cases that they have generated nationwide media coverage.

Many of these new products are drugs that are infused or injected in the hospital outpatient setting, which make them 340B-eligible for hospitals that qualify. That contributes to total 340B purchases beyond any additional uptake of drugs that have been on the market for years.

The Rise of Specialty Drugs

Increasing numbers of patients are being prescribed specialty drugs to treat their diseases and conditions. These drugs often come with special handling requirements and more complex instructions. They also often come with very high price tags.

Those high price tags have helped drive 340B drug spending because the mix of drugs that providers prescribe is rapidly shifting toward specialty drugs. These include some of the costliest products to treat cancer, multiple sclerosis, autoimmune disorders, and other complex diseases.

When 340B first came into being in 1992, virtually no specialty drugs existed. Data show that by 2010 they made up 27% of pharmaceutical spending, and by 2022 that figure was a whopping 51%. In the decade from 2012 to 2022, spending on specialty drugs grew from $81 billion to $219 billion.

Massive uptake in the use of just a few blockbuster drugs can move the needle rapidly on the amount spent on 340B drugs. 340B Health calculations of pricing data demonstrate that just five specialty drugs introduced within the past decade (Keytruda, Darzalex, Dupixent, Biktarvey, and Trikafta) alone accounted for a $2.3 billion increase in 340B purchases from 2019 to 2020.

Amid complaints about unilateral drug company restrictions on the 340B drug pricing program and mounting pressure from industry-backed advocates for even more 340B changes to favor drugmakers, a bipartisan group of six U.S. senators have taken a proactive step by asking for ideas to ensure “stability” for 340B.

This move came in the form of a request for information (RFI) that prompted a raft of responses. Some of the feedback could form the basis for legislation to amend 340B and possibly set the stage for a comprehensive discussion on its future. Those ideas include several proposals by 340B hospitals and other covered entities to strengthen 340B. Also in the mix, however, are proposals by the pharmaceutical industry and its allies that would reduce 340B benefits for providers.

The RFI is from six longtime supporters of 340B, Sens. John Thune (R-S.D.), Debbie Stabenow (D-Mich.), Shelley Moore Capito (R-W.Va.), Tammy Baldwin (D-Wis.), Jerry Moran (R-Kan.), and Ben Cardin (D-Md.). Several of the senators have been critical of the actions of a group of drug companies that have been limiting hospitals’ ability to partner with community and specialty pharmacies to deliver discounted drugs to their patients. The senators’ stated goal is to focus on both “stability and oversight” of 340B.

Hospitals and Pharmacists United

In response, 340B Health offered a series of proposals to strengthen 340B and protect it against the harmful actions of drug companies. These include:

• Restoring the 340B benefit for drugs dispensed through community and specialty pharmacies and prohibiting drug companies from imposing conditions that restrict 340B.
• Allowing covered entities the ability to directly challenge unlawful drug company 340B restrictions or conditions in federal courts.
• Prohibiting discriminatory policies by payers and pharmacy benefit managers (PBMs) for drugs that 340B hospitals administer or dispense to their patients.
• Prohibiting states from mandating that providers use or do not use 340B drugs for Medicaid patients.
• Eliminating statutory provisions that increase drug costs for hospitals, such as the orphan drug loophole and group purchasing organization (GPO) prohibition.

340B Health urged the lawmakers to reject proposals to impose unnecessary and burdensome reporting requirements on 340B hospitals. It asked the senators to encourage the Health Resources & Services Administration (HRSA), which administers 340B, to exercise its existing authority to conduct greater 340B oversight over drug companies and wholesalers, including through more frequent audits and by fully operationalizing the 340B administrative dispute resolution (ADR) process. Finally, 340B Health urged Congress to include protections against HRSA taking any administrative actions to narrow the scope of 340B.

Similar comments went to the six senators from such 340B advocates as the American Hospital Association (AHA), the American Society of Health-System Pharmacists (ASHP), America’s Essential Hospitals (AEH), the Association of American Medical Colleges (AAMC), the Catholic Health Association of the United States, and the Children’s Hospital Association.

Drug Industry Attacks

Given its multi-year, multi-million-dollar campaign to weaken 340B, it was not surprising that the drug industry and its allies weighed in with proposals to shrink the scope of 340B and exclude many hospitals and their patients from its benefits.

The Pharmaceutical Research & Manufacturers of America (PhRMA) said in its comments that it believes 340B should serve a much narrower purpose than Congress intended. The group says Congress should limit 340B to helping “low-income, uninsured, and other vulnerable patients obtain the outpatient medicines they need,” the letter states.

This proposal is contrary to the expressed intentions of Congress when it debated and approved the 340B statute in 1992. In a committee report during that process, Congress said the purpose of 340B was to “stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.”

As a federal judge explained in a recent 340B court decision: “340B entities are able to stretch these scarce Federal resources because they receive their drugs at a discount and are reimbursed by insurers at the non-discounted price of the drug… . This allows 340B entities to provide more services to a larger population of under-served patients.”

To reduce the scope of 340B to fit its narrow vision, PhRMA would have Congress make the 340B definitions of a qualified hospital and a covered patient significantly more restrictive than they are today. Such changes would dramatically reduce the benefit of 340B to providers, directly impacting patient care. The law requires 340B providers to serve all patients, including those with low incomes and those living in underserved rural parts of the country. PhRMA-backed requirements for hospitals and other covered entities to pass the 340B discounts directly to patients would eliminate their ability to invest the savings into providing more comprehensive services.

Other drug industry proposals include limits on hospital-pharmacy partnerships and hospital child sites as well as requirements for hospitals to report information to the government on matters unrelated to 340B, such as their provision of charity care. Drug industry partners submitted similar proposals, including groups that PhRMA funds.

What Comes Next?

The senators who requested these ideas have not set a timeline for next steps. RFIs can lead to hearings, congressional letters to the administration, or proposed legislation. While it is not certain that these ideas and others being considered on Capitol Hill will find their way into legislation, lawmakers might introduce such measures in the coming months. Such legislation would need bipartisan support to pass Congress and be signed into law by President Biden.

Nov. 27, 2023­­­— Gary Chandler was in good company when he visited Ascension Via Christi St. Francis in Wichita, Kansas, because he was feeling unwell. One-quarter of patients at the health system’s three hospitals in the Wichita area are on Medicaid or are uninsured, like Chandler was when he came in. But his diagnosis was much more uncommon – aplastic anemia, a rare blood disorder that can require hundreds of thousands of dollars’ worth of treatments that are out of reach for someone without health coverage. So his caregivers marshaled 340B resources to help.

Ashley Martin is a clinical oncology pharmacy specialist for Ascension Via Christi Hospitals. She describes how the system used its access to 340B pricing to provide steep discounts to Gary on the infused drugs that he needed from his hematologist. Thanks to 340B, he received these lifesaving treatments for a year-and-a-half from his initial diagnosis and again after he suffered a relapse of his disease.

“Without the 340B program, we would not have been able to provide the care that Mr. Chandler needed,” said Martin, who shared this patient’s story as one of our newest Faces of 340B profiles. “He is currently doing very well.”

340B Help for All Those Who Need It

Chandler’s story is one of the many patient health successes that are due to the dedicated health providers at Ascension Via Christi and their ability to serve patients in need using 340B resources. These patients include not just those living in or near Wichita but those living in more rural areas that the system also serves.

Patients who cannot afford their medications benefit from 340B through the system’s charity pharmacy services, which provide free medications to patients with low incomes. Patients with cystic fibrosis have dedicated pharmacist services funded in part through 340B. And through their access to 340B pricing, outpatient pharmacies located at the hospitals provide affordable medications to discharged patients who are heading home.

All that 340B-supported care results in better patient adherence to medication regimens and lead to better health outcomes for those patients, Ashley said.

Learn About More 340B Patient Success Stories

Check out Martin’s video profile on our Faces of 340B page. For more stories about how Ascension Via Christi uses 340B to help patients in need, check out our podcast episode and our case study on the health system’s Community Cares Clinic, which provides home health services for chronically ill patients who cannot come into the hospital for their care.

Sept. 7, 2023— Recent peer-reviewed research illustrates one of the many ways 340B savings bolster the nation’s rural hospitals and the communities and patients who rely on them for care. The findings help enrich a deep and growing evidence base for the vital role 340B is playing in American health care.

Researchers from the University of Arkansas and the University of Colorado published their findings in Health Affairs, one of the nation’s most respected policy journals. The researchers wanted to see whether becoming 340B-eligible led rural hospitals to add critical services to prevent and treat cancer. They focused on rural general acute care hospitals that lacked oncology services in 2011.

340B’s Support for Rural Health

Congress created 340B in 1992 to help hospitals and clinics serving large percentages of low-income patients “stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” As part of the Affordable Care Act of 2010, Congress voted to expand 340B eligibility to critical access hospitals (CAHs), sole community hospitals (SCHs), and rural referral centers (RRCs), among others. Many of those types of hospitals, which tend to serve rural areas, began to enroll in 2011.

To determine the impact of 340B eligibility on cancer care availability, the researchers looked at three sets of hospitals – the early adopters that enrolled between 2012 and 2015, the late adopters that enrolled in 2016-18, and those that did not enroll. The researchers found the 340B hospitals were 8.3 percentage points more likely to have added oncology services by 2020. “After 340B enrollment there was a clear and persistent increase in the probability of offering oncology services at newly participating hospitals,” the researchers write.

Cancer Care Struggles in Rural America

It has been well-documented in numerous published studies that the 46 million Americans who live in rural parts of the country face significant challenges when it comes to cancer care and prevention. More than 46 million Americans, or 15% of the U.S. population, live in rural areas as defined by the U.S. Census Bureau. Access to cancer care and prevention is especially vital for residents of rural communities, which are often underserved and struggle to gain access to needed care.

The National Cancer Institute has found that rural residents face serious disadvantages compared to urban residents, including socioeconomic deprivation, limited access to quality health care, and risk factors for cancer. While there are many reasons for these disparities, including behavioral and environmental factors, the lack of access to cancer care and prevention is a key factor.

Rural Americans must travel farther to see a cancer specialist. In fact, about one in five rural residents must travel 60 miles or more to obtain care. Because cancer care often requires multiple visits for treatment, rural cancer patients have a harder time accessing and receiving needed treatment.

More Progress Needed

The impact of these disparities is illustrated by research finding that while cancer incidence rates in urban and rural areas are about the same, cancer mortality rates in rural communities are statistically higher. While cancer mortality rates have been dropping in the U.S., a study looking at the annual, age-adjusted mortality rates for all types of cancer during 2006-15 found rates declined more slowly for rural parts of the country (-1.0%) than in urban areas (-1.6%). 

The authors of the latest study point to another factor in access to cancer care in rural America. The newly participating hospitals that added oncology services were disproportionately located in Medicaid expansion states and in counties with lower uninsurance rates. The ACA allowed states to expand Medicaid eligibility to include individuals with income up to 138% of the federal poverty line (or a little more than $20,000 a year). According to the Kaiser Family Foundation, 40 states and the District of Columbia have adopted the Medicaid expansion and 10 states have not. Most of the states that have not expanded eligibility for Medicaid are in the southeast quadrant of the country, which the American Cancer Society has found to have some of the highest cancer mortality rates in the country.

June 15, 2023— Newly published research illustrates that while 340B hospitals tend to treat patients who are sicker and in greater need of care, they do not prescribe more expensive drugs than non-340B hospitals after those differences are taken into account.

The latest evidence appears in the peer-reviewed Journal of the American Medical Association (JAMA). Researchers examined Medicare Part D data for fiscal year 2020 to see if physicians in 340B-eligible hospitals were more likely to prescribe more expensive brand-name drugs versus the lower-priced generic products available on the market.

After examining drugs prescribed for patients of 340B-eligible hospital providers versus those ordered by non-340B hospital prescribers, the researchers report they “found no meaningful difference in overall generic prescribing rates.” In FY 2020, generic drugs made up 86.6% of Medicare Part D prescriptions from non-340B hospital prescribers and 86.4% of Part D prescriptions from 340B-eligible hospital prescribers. But after adjusting for differences in therapeutic class mix, the figure for 340B-eligible hospital providers was 86.6% – identical to the non-340B hospital rate.

The researchers looked more closely at the various classes of drugs covered by Medicare Part D and found 11 classes for which 340B-eligible prescribers had statistically significant higher generic prescribing rates and 17 classes where non-340B prescribers had statistically significant higher generic prescribing rates. In three-quarters of those cases, the differences were less than two percentage points. The researchers concluded that such variation was more evident for drug classes that are not prescribed as much, for which a difference in numbers of prescriptions translates into larger percentage-point differences. For cardiovascular agents, the drug class with the highest use, 340B-eligible prescribers had a 95.9% generic prescribing rate compared to 95.7% for non-340B prescribers.

Important Data for Policymakers

This new research is critically important as policymakers on Capitol Hill debate proposals to restrict the size of 340B. One of the arguments frequently put forward in favor of such legislation is that 340B hospitals have a financial incentive to prescribe branded drugs when a less expensive generic product is available.

Under the 340B statute, eligible covered entities can purchase outpatient drugs at a discount and use the savings to “stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” 340B requires a minimum discount of 23.1% for outpatient brand-name drugs and 13% for generic products. Some have suggested that the higher savings for branded versus generic drugs could induce 340B hospital prescribers to favor the costlier products.

An important factor in comparing 340B and non-340B hospitals is the type of patients treated by each. For example, the JAMA researchers noted 340B-eligible patients with Medicare are more likely to be dual eligible and/or disabled. Most dually eligible patients qualify for both Medicare and Medicaid because they are living with low incomes. Disabled people who are eligible for Medicare tend to be younger than the traditional group of beneficiaries who are ages 65 or older. Those differences in types of patients also are associated with differences in their health needs and the complexity of their care.

A Growing Body of Evidence

In January 2020, the independent Medicare Payment Advisory Commission (MedPAC) issued another important report investigating these factors. MedPAC looked at the use of oncology drugs for Medicare Part B patients diagnosed with five forms of cancer (breast, colorectal, prostate, lung, and leukemia and lymphoma). They found that while there were variations in spending by 340B and non-340B hospital prescribers, they were “unable to attribute these findings to incentives created by 340B discounts.” Another study also published in JAMA confirmed that there is no drug spending difference between 340B and non-340B hospitals once beneficiary-level risk factors and hospital characteristics are taken into account.

Like the new JAMA study, MedPAC’s researchers noted important differences in patient mix and hospital size. For example, they noted that 340B hospitals are more likely to be larger teaching hospitals and caring for patients who are young, disabled, and receiving assistance designated for low-income Medicare beneficiaries.

Together, these three reports are part of a growing body of evidence for policymakers to consider as they debate proposals to change 340B.

January 13, 2023– Note: This story is updated to include information for Biogen, which announced 340B restrictions in December 2022.

The 19 drug companies that have imposed restrictions on safety-net hospital access to 340B drug pricing program discounts collectively brought more than $660 billion in revenues in 2021. The banner year for the companies occurred as hospitals reported increasing losses of 340B savings from the drugmaker-imposed cuts.

In February 2022, most drug companies reported their financial results for both the final quarter of 2021 and the full year, and the reports to investors contain some massive figures.

2021 Revenues for Companies Implementing 340B Cuts

Leading the pack is Johnson & Johnson, the largest drugmaker in the world, with annual revenues approaching $100 billion. The company reported significant growth in its pharmaceutical sales last year for top-selling drugs used to treat various cancers, inflammatory diseases, and schizophrenia. Also contributing to this total figure were sales of the COVID-19 vaccine the company produced under its subsidiary Janssen. J&J’s restrictions on 340B did not take effect until May 2, so the 2021 revenue figures account for what the company brought in while offering full discounts on all eligible drugs.

Pfizer was close behind J&J, bringing in a record $81.3 billion in revenue last year. This performance was driven largely by sales of Comirnaty, the COVID-19 vaccine that Pfizer and BioNTech produced jointly, and Paxlovid, the Pfizer medication for patients with COVID infections. At the same time Pfizer was preparing to release its report, the company announced it would become the 13th drugmaker to impose pricing conditions for safety-net hospitals on 340B drugs dispensed at community-based pharmacies. To continue receiving discounted prices through their community pharmacy partnerships, hospitals must hand over pharmacy patient claims data the company is demanding. The policy, which took effect March 1, targets Xeljanz, a drug used to treat certain types of arthritis, as well as 11 oral oncology drugs that the company makes for patients living with cancer. Pfizer brought in more than $2.5 billion in Xeljanz sales alone last year.

Following Pfizer in the revenue column is AbbVie, which reported that it brought in more than $56 billion in 2021. This figure was driven largely by sales of the immunosuppressive medication Humira, which at more than $20 billion in net revenues is the world’s top-selling drug. AbbVie implemented its restrictive 340B policy on Feb. 1, the day before its financial report came out. The policy, which also conditions discounted pricing through community pharmacies on the submission of patient claims data, applies to a list of two dozen drugs that includes Humira. The company has warned that it might consider expanding that list to restrict access to discounts on more of its drugs.

One of the newest drug companies to announce 340B restrictions is high up on the 2021 revenue list as well. GlaxoSmithKline (GSK) pulled in almost $47 billion last year, nearly $6 billion of which came from the sales of inhaler products used to treat patients with respiratory diseases such as asthma and chronic obstructive pulmonary disease (COPD). In a policy that took effect April 1, GSK is targeting these respiratory drugs – including bestsellers Advair, Breo, and Ventolin – with 340B pricing restrictions for hospitals that do not turn over claims data.

Cuts Are Leaving Deep Marks

340B restrictions by 10 drug companies – AbbVie, Amgen, Bausch Health, Biogen, Bristol Myers Squibb, Exelixis, Gilead, GSK, J&J, and Pfizer – did not take effect until after the start of 2022. Collectively, those companies alone brought in nearly $400 billion in revenues even while offering unrestricted 340B discounts to safety-net hospitals, health centers, and clinics.

Hospitals have been reporting significant financial pain caused by the 340B restrictions. In July 2020, Eli Lilly became the first drug company to start denying discounts on drugs dispensed at community pharmacies. Those restrictions now have been in place long enough that they have been noted on numerous Lilly financial reports as a significant contributor to the company’s bottom line. Lilly reported more than $28 billion in revenues in 2021 on the strength of top sellers Trulicity, Humalog, and Jardiance. Those are diabetes drugs for which safety-net hospitals are sustaining some of their largest losses of 340B savings under drug company restrictions.

The 19 restrictive policies involve many of the best-selling drugs in the world needed to treat patients with diabetes, cancer, respiratory diseases, and other chronic illnesses. When a company refuses to offer a discount on one of these drugs, resources that hospitals say should be going toward the health care safety net instead shows up as part of a revenue column on these financial reports.

Price Hikes, Like Clockwork

As drug companies were putting the finishing touches on their earnings reports, they were also engaging in another annual tradition – price hikes. Companies typically raise prices in two batches, once at the beginning of the year and again in the middle of the year. January 2022 was no exception.

The Campaign for Sustainable Drug Pricing (CSRxP), which closely monitors drug pricing and promotes policy solutions designed to lower drug prices, reported on the first batch of 2022 price hikes in January and again in July. CSRxP noted 785 such increases on brand-name drugs at the beginning of the year, with the average increase approaching 5%. The group reported a second round of increases for more than 100 brand-name drugs in the first week of July alone.

Some of the more notable pricing jumps involve drug companies that are among the 19 now limiting 340B discounts. For instance, Pfizer increased its prices on more than 100 of its drugs, including a 16.8% boost on the price of the frequently prescribed drug Solu-Cortef, which treats a wide range of conditions. GSK raised prices on more than 30 of its drugs, including 7% hikes for cancer drug Zejula and anti-seizure drug Lamictal. BMS hiked the price tags on more than a dozen of its most-prescribed drugs. Gilead raised prices more than 5% on its HIV drugs Biktarvy and Descovy. Some drug companies have limited their 340B pricing restrictions only to certain drugs, but they could expand those lists at any time.

The earnings reports and the news about price increases together formed another reminder that the pharmaceutical companies are the ones that determine the prices of drugs, based largely on what they expect the market will bear. Now an increasing number of companies are making themselves the ones that determine when they will grant discounts to safety-net hospitals as well.

Dec. 23, 2022­­­— The examples of worsened health outcomes for patients from drug company restrictions on 340B pricing to safety-net hospitals continue to mount. At Riverside Regional Medical Center in Virginia, one discharged patient with diabetes was readmitted to the hospital within days due to delayed access to an insulin medication for which drug companies had restricted 340B pricing. 

Prior to the drug company 340B restrictions, the patient paid less than $10 out of pocket for insulin he received at the hospital’s community pharmacy, according to Cynthia Coffey, Riverside’s director of retail pharmacy. Once the 340B restrictions went into effect, the patient’s out-of-pocket cost for insulin skyrocketed to $191 each time he filled his prescription at the community pharmacy located in the hospital. That price was just too much for the patient.

“The patient chose to not fill the medication,” Coffey said. “Unfortunately, two days later, the patient was readmitted into the hospital due to uncontrolled blood sugars.”

Coffey shared this patient’s story as one of our newest Faces of 340B profiles. The story is an example of the barriers the hospital’s patients face from 19 drug companies’ unlawful restrictions on access to 340B pricing. It is not the only example of harm that Riverside Health System’s patients have experienced from these actions.

Disruptions to Medication Regimens  

Riverside Shore Memorial Hospital is another hospital in the Riverside Health System. Located on the Eastern Shore of Virginia, the hospital serves a community that is physically separated from the rest of Virginia by a bay. The only way to access the Eastern Shore by land is to travel over an 18-mile bridge/tunnel that includes a toll. The hospital also serves a high percentage of patients living with low incomes.

340B savings for Riverside Shore Memorial fund the hospital’s comprehensive oncology services, including radiation and infusion treatments. If the hospital did not offer these services, patients on the Eastern Shore would need to drive 90 minutes to access these vital services. The hospital notes that without access to 340B savings, the hospital would be at risk of closing its doors due to its razor-thin operating margins.

The 340B community pharmacy restrictions have reduced these savings for Riverside Shore Memorial and harmed patient access to medications. David Jones, MD, the chief medical officer at Riverside Shore Memorial, is another of our newest Faces of 340B profiles. He notes that given the geographic barriers Eastern Shore patients face, the hospital’s 340B community pharmacy partnerships enable patients to fill their prescriptions much closer to home. This access improves medication adherence.

Jones specializes in pulmonary medicine and cares for many patients with asthma and chronic obstructive pulmonary disease (COPD). After the drug company 340B restrictions started, he saw his patients run into barriers to affording vital inhaler medications.

“I have a patient with COPD and because he is underinsured, he is unable to afford the basic maintenance inhalers he needs,” Jones said. “Due to the restrictions, he was unable to obtain one of those medications that he had previously been on. As a result, he had increasing symptoms of shortness of breath, wheezing, he required additional office visits, and we had to supplement his medications with other medications that had increasing side effects and were not as effective for him.”

More Emergencies on the Horizon?

340B community pharmacy partnerships are critical to Riverside Health System’s efforts to provide comprehensive care to uninsured and underinsured patients, Coffey said. Many of the patients who receive low-cost medications dispensed at Riverside Regional Medical Center’s community pharmacy cannot access the medications through drug company assistance programs. She and Jones are both concerned about what will happen to their patients if drug company restrictions on 340B pricing continue and worsen in 2023.

“I feel certain that patients that have relied on these discounts to obtain the most basic of medications won’t have access to it,” Jones said. “This will result in increasing emergency department visits and most likely hospitalizations. The access to the 340B discount program is really essential.”

Check out Coffey’s video profile and Jones’s video profile on our Faces of 340B video page.

Dec. 9, 2022— On Jan. 1, hospitals participating in the 340B drug pricing program will start off the new year with something they have not had since 2017 – full Medicare payment rates for 340B-purchased drugs. While those hospitals say the end to the cuts is welcome news, they continue to wait for repayments to remedy the nearly five years’ worth of pay cuts that many 340B hospitals have absorbed.

January 2023 will mark the return to a full year of 340B hospitals receiving the same Medicare reimbursements for outpatient drugs that all hospitals receive under the outpatient prospective payment system (OPPS). Beginning in 2018, many 340B hospitals were hit with a cut of nearly 30% in Medicare Part B payments under the OPPS for drugs they purchased at 340B prices. The Centers for Medicare & Medicaid Services (CMS) is now restoring payments to their prior levels following a prolonged legal battle that ended with a unanimous U.S. Supreme Court agreeing the government had overstepped its authority in making the cuts.

How 340B Hospitals Got Here

The Trump administration put the cuts in place as part of its final OPPS rule for calendar year 2018. CMS offset the estimated $1.6 billion in annual cuts with corresponding increases in payments for non-drug services under Medicare “budget-neutrality” rules. A group of 340B hospitals and national organizations went to court to block the cuts and won an early decision in their favor. But an appeals court reversed that decision, bringing the case to the Supreme Court.

In June 2022, the high court unanimously decided that the pay cuts were indeed unlawful. In July, CMS announced in a proposed rule that it intended to end the cut and restore full outpatient drug pay rates starting Jan. 1, 2023. A lower federal court ordered the current payment cuts to end immediately, a change that CMS implemented in late September. On Nov. 1, the government issued a final rule setting Medicare outpatient payment rates for 2023 and confirming the cuts would end.

“We are very pleased to see that CMS has restored equity to the Medicare outpatient prospective payment system,” 340B Health President and CEO Maureen Testoni said in a statement. “For 30 years, 340B has supported hospitals in serving patients living with low incomes, and full Medicare payments for those services are essential for the health care safety net.”

The latest development also is likely to have wider benefits for 340B hospitals beyond what they receive from Medicare for drugs they purchase. Private insurance plans often follow Medicare’s lead when setting their own payment rates. Medicare’s elimination of the differential payments eliminates a major precedent that private payers had been citing for imposing discriminatory payment rates of their own on 340B hospitals.

Undoing Past 340B Cuts

The official change in Medicare rules to restore the full statutory payment rates to 340B hospitals does not settle the issue of providing remedies for past cuts. When the Supreme Court decided those cuts were unlawful, it obligated CMS officials to find a way to provide relief for hospitals that had been affected by the reduced payments.

340B Health and other hospital advocates are calling for lump-sum repayments of all losses, plus interest, to hospitals for the additional amounts they should have received since 2018 had the unlawful cuts not been in effect. These comments note that CMS officials can make those repayments on a hospital-by-hospital basis without adjusting payment rates for any other outpatient services.

It is not clear when the government and hospitals will resolve the repayment question. In its final 2023 OPPS rule, CMS pledged to devise a plan through a separate rulemaking process, which is expected to take months to unfold. The government says it plans to propose a remedy, consider public comments, and issue a final rule sometime next year.

As 340B hospitals await clarity on how they might be repaid for Medicare cuts, they are preparing for another year of caring for patients in need. This time, they are doing so with the knowledge that they will be paid at the same level as all other hospitals for their drug purchases.

Nov. 22, 2022— No patient should be showing up in the emergency department as many as 20 times per year because of their chronic health conditions. But nearly a decade ago, the staff at Hennepin Healthcare in Minneapolis were noticing this happening among some of their patients with complex health care needs and multiple diagnoses. That is when the health system created an innovative solution to the problem with the help of its savings from the 340B drug pricing program.

Hennepin Healthcare used 340B savings to fund a coordinated care clinic to better support patients who were frequent visitors to the ED for conditions that could be treated with more preventive care. Relying on the ED to treat these patients when their chronic conditions became uncontrolled was more costly and inefficient for both the patients and the health system.

“By looking at those patients that frequently visited, we felt if we could have them come to the clinic instead of the emergency department, we could better focus on their needs,” said Christene Jolowsky, the senior director of pharmacy for Hennepin. “The clinic was formatted for patients that did not need emergency care. We refer to this as an acute care clinic.”

Hennepin’s coordinated care clinic offers myriad services in one location, including primary care, medication therapy management, psychology, substance use disorder counseling, and housing support services. Many of these services are underfunded by public health programs, and that is where 340B resources come in.

“340B is supporting everything we do in our coordinated care clinic,” Christene said. “We are able to provide someone to assist with housing. We are able to get the medications to the patient. We are able to have staff that can meet with the patient every week and fill a pillbox and talk to them about what is in that pillbox so they understand the importance of taking their medications.”

We recently spoke with Christene on our 340B Insight podcast to learn more about how the 340B-funded coordinated care clinic works for patients.

A Day at the Clinic

Christene and her colleagues at Hennepin identify patients who have three or more diagnosed health conditions and who have visited the ED three or more times in a calendar year. These are the patients they refer to the clinic.

Today, the clinic serves about 500 patients, and about half of them have unstable housing, about 60% have diagnosed mental health disorders, and about 70% have substance use disorders. This means the clinic must provide extensive support to help these patients manage their health needs.

During a typical visit to the clinic, a patient likely would see a physician or nurse, a pharmacist, and a social worker all in one place. Christene describes the experience as “high-touch.” This is to ensure that the providers address all the factors affecting a patient’s health care, including social determinants of health such as transportation, housing, and food access.

“We want to maximize the outcome of their therapies and their health care plan,” Christene said.

Although patients visit the clinic on average once per month, some patients visit as often as once per day to ensure their health is staying on track. Staff at the clinic also need to be flexible with their schedules as patients sometimes come in without an appointment because they suddenly need care. Other times, patients might not make their appointments on time due to lack of access to reliable transportation.

“This is not a group of patients that we can handle virtually,” Christene said. “We need to be present for these patients.”

Improved Health Outcomes

Christene reports that the 340B-funded coordinated clinic has reduced ED visits for its patients, cut down on the number of medications that patients are prescribed, and lowered the cost to the overall health system of providing care to the clinic’s patients.

One of the patients that Christine discusses on the podcast is an individual who had 12 pages of prescribed medications when he first came into the clinic.

“This not only highlights issues going on within this patient’s life, it also shows how uncoordinated care really is because this patient was seeing multiple providers and nobody was overseeing everything that he was doing,” Christene said. “When he met with one of our pharmacists, it took a while, but he went down from 12 pages of medications to four.”

Another patient needed the clinic’s support after suffering a stroke that led to short-term memory loss. The clinic used its funding to purchase an automated medication dispenser with an alarm to help ensure the patient remembered to take the medications he needed to manage several chronic conditions including atrial fibrillation, high blood pressure, and kidney disease. A pharmacist at the clinic also worked to synchronize the patient’s medications so he could take them all at the same time each day. As a result, the patient’s blood pressure and kidney disease have stabilized.

“It takes a lot of perseverance,” Christene said when discussing the clinic’s work with patients. “We’re working with some fabulous human beings and we’re able to care for some fabulous human beings that trust us for their care, and that’s important.”

Listen to our full interview with Christene on your favorite podcast platform.

Nov. 10, 2022— It is safe to say the 340B drug pricing program would not be what it is today without former Congressman Henry Waxman. In fact, 340B might not even exist. As chairman of the key congressional committee with jurisdiction over health care programs, the California Democrat was the lead author of the legislation that created 340B in 1992. To mark the 30^th anniversary of 340B on Nov. 4, our 340B Insight podcast features an interview with the congressman to hear more about how he helped create 340B and discuss his thoughts on its legacy.

The 340B law requiring pharmaceutical manufacturers to provide discounts on certain outpatient medications to safety-net hospitals, community health centers, and clinics is one of Waxman’s many legislative accomplishments during more than 40 years in Congress, including serving as chairman of the House Energy & Commerce Committee.

Bipartisan Roots

340B was the product of bipartisan discussions in the House and Senate and was signed into law by President George H.W. Bush. According to Waxman, Congress’s desire to protect and strengthen the health care safety net was the primary reason he and a bipartisan group of his colleagues created 340B. The core concept of the law was to give safety-net providers access to the lowest price possible for medications. It followed earlier legislation that reduced the amounts that state Medicaid programs would pay for covered drugs.

“There was bipartisan support for protecting the health care safety net and programs like Medicaid and Medicare to cut back on the amount that they would pay for the care that they were giving,” Chairman Waxman said. “This helped [the providers] recover what the safety-net public programs were able to pay at a lower price and give them that ability to get a discount on the drugs and have money left over to provide additional services to low-income people.”

Waxman also was one of the leaders in 2010 of the effort to enact the Affordable Care Act, which allowed critical access hospitals, rural referral centers, sole community hospitals, cancer hospitals, and children’s hospitals to become eligible for 340B. Members of Congress again worked across the aisle to support 340B. Waxman explained that this time it was New Mexico Senator Jeff Bingaman, a Democrat, and South Dakota Senator John Thune, a Republican, who led the effort to expand access to 340B. The senators wanted rural hospitals to have access to 340B resources to help them remain open and available to their communities.

A Continued Focus on the Safety Net

Much has changed in the 30 years since 340B became law. This includes advances in the technology and medications available to care for patients. What has not changed is the need for a strong health care safety net or the need for 340B, Waxman said.

“We should be very proud of the program,” he said. “340B has helped preserve the safety net during a time of economic upheaval and a global pandemic. Things would be so much worse if we didn’t have the 340B program.”

Listen to our full interview with Chairman Waxman on your favorite podcast platform.