BY John Hawkins
It’s a tricky thing to set up any program – government-run or otherwise – to attack big health care problems on a grand scale. A lot of factors come into play to make such a program work, and once you’ve found the right formula, it’s important to make sure any tweaks won’t dilute its quality – or worse, render it ineffective or unworkable.
Out of the many programs that have been launched at both the federal and state levels, the federal 340B Drug Pricing Program is one that we at the Texas Hospital Association particularly and consistently champion. The 340B program requires drugmakers participating in Medicaid to sell outpatient drugs at a discount to eligible hospitals, clinics and other organizations serving low-income patients and the uninsured.
The program offers patients at safety-net hospitals a route to obtaining pharmaceuticals at a lower price – and allows hospitals navigating ever-rising costs for drugs and other key facets of their operation to obtain what they need to serve their communities. As an analysis by Healthsperien put it, 340B provides a “critical lifeline” for hospitals at risk of closure or reduced services: “Hospitals can use their program savings to maintain and, in many cases, expand access to care. The program allows each 340B hospital to best support the unique needs of the patients and communities they serve.”
Despite that success, there are ongoing efforts to mess with a good thing – and in the process, create more regulatory burdens for our heavily regulated industry. Our goal at THA is to keep anything from hampering the effectiveness of 340B in aiding patient care, and in helping our hospitals maintain the services and access their communities need.
For some time, congressional lawmakers have been entertaining the notion of reforms, driven by the pharmaceutical drug industry, that would increase reporting requirements for hospitals that benefit from the program. They claim the program lacks transparency, and that hospitals and other 340B-participating facilities need to demonstrate that they’re reinvesting the resultant savings in patient care. Make no mistake: These efforts are a thinly veiled attempt to restrict participation in 340B and reduce the amount of drug discounts offered to hospitals.
But as AHA notes in its 340B fact sheet, hospitals that participate already must meet “numerous program integrity requirements,” including attestations, annual recertification and keeping auditable records and inventories of all their prescription drugs, including 340B prescriptions. Audits from both federal health authorities and drugmakers are already standard operating procedure at 340B hospitals. In a professional space where a vast web of reporting requirements are diverting hospitals from their health care mission, more reporting burdens are both unnecessary and unnecessarily onerous.
Hospitals are committed to transparency, and both THA and AHA have talked at length with congressional lawmakers about what that should look like in the context of 340B: that both participating drug companies and health care facilities should be subject to the same standards of transparency. Right now, it’s 340B facilities who are doing their part in that area more so than drugmakers, who continue to exponentially raise the prices of their pharmaceuticals. We’re continuing to champion legislation and/or regulations in Washington, D.C., that would even the scales on that score.
At the end of September, we got welcome 340B news as a major drugmaker – thanks in part to pressure from THA and other hospital advocates – backed down on a damaging plan. Johnson & Johnson had announced its intention to abandon the standard upfront discounts for certain outpatient 340B drugs, and instead pay facilities through a rebate on the back end. THA and AHA have maintained that a 340B rebate scheme – among other problems – is unworkable for health care organizations that don’t have the financial means to front the money for these expensive drugs.
As proposed by Johnson & Johnson, it’s also against the law, as the Health Resources and Services Administration (HRSA) noted. HRSA sent a letter to Johnson & Johnson on Sept. 27 letting them know that their rebate proposal couldn’t proceed without approval of the secretary of Health and Human Services (HHS), and doing so would be a violation of the Public Health Service Act. HRSA demanded Johnson & Johnson notify HRSA by Sept. 30 that it was scrapping the rebate plan, which the company did.
This reversal came right after THA visited Washington and met with members of the Texas congressional delegation to stress our opposition to this or any 340B rebate plan. In response to advocacy efforts by THA and member hospitals, 13 members of the delegation signed a letter to the HHS secretary urging the agency to intervene.
To me, that result is a heartening sign of what is possible as hospital advocates keep working to defend 340B. The program – as we know it today – has fans on both sides of the political aisle who understand its importance. As Congress keeps looking at 340B, we’ll keep working to make sure it stays that way.