340B Health Statement on Senate HELP Drug Pricing Hearing
June 14, 2017—The Manhattan Institute made several unsubstantiated comments about the 340B drug discount program during a Senate Health, Education, Labor, and Pensions Committee hearing yesterday on soaring prescription drug prices. The 340B program helps hospitals serve low-income and rural patients.
The think tank alleges that 340B increases drug prices. This is inaccurate. 340B reduces prescription drug costs for hospitals and their low-income and rural patients. Indeed, Allan Coukell, Senior Director of Health Programs for the Pew Charitable Trusts, recognized this in his testimony, in which he recommended that Congress limit the 340B program's orphan drug exclusion. (The exclusion frees drug manufacturers from having to provide 340B discounts to rural hospitals for drugs that have received an orphan designation. Rural hospitals consequently pay significantly more for these drugs as a result. Bipartisan legislation to limit the exclusion was introduced in Congress today.)
What’s more, drug manufacturers provide only $6 billion in 340B discounts a year. That’s 1.3 percent of the $457 billion drug market. Taking away 340B would do nothing to lower drug prices and would instead increase costs for hospitals and their low-income and rural patients.
The institute alleges that 340B hospitals are not serving indigent and uninsured populations. The institute is misinformed. 340B hospitals do, in fact, devote significant resources to Medicaid, uninsured, and underinsured populations.
- 340B disproportionate share hospitals provide 60 percent of all uncompensated care but account for only 36 percent of all Medicare acute care hospitals
- 340B DSH hospitals provide 64 percent more care to Medicaid and low-income Medicare patients
- 340B DSH hospitals treat 60 percent more low-income cancer patients compared to non-340B providers
- 340B DSH hospitals are more likely than non-340B hospitals to provide specialized services for which we are underpaid
In its written testimony, the institute said 340B causes hospitals to acquire oncology practices. This allegation is unsubstantiated. Many types of physician practices across the country, not just cancer clinics, are merging with hospitals for reasons unrelated to 340B. More to the point, a recent Health Affairs study concluded that 340B was not the primary cause of consolidation between newly-eligible 340B hospitals and oncology practices and instead this type of consolidation may be part of the broader trend toward integrated healthcare system. Research shows that 340B hospitals continue to treat more low-income cancer patients than non-340B providers, with 340B disproportionate share hospitals treating over 60 percent more low-income Medicare cancer patients than non-340B providers.
Hospitals rely on their 340B savings to fund critical programs for their low-income, Medicaid, uninsured, and underinsured patient populations. 340B hospitals serve more low-income patients and provide more uncompensated care than non-340B hospitals. They provide more vital but money-losing services that are critical to low-income patients like labor and delivery, trauma care, and HIV/AIDS services. 340B hospitals also serve more Medicare Part B patients who are disabled, dually eligible for Medicare and Medicaid, or are a racial or ethnic minority.
Consider these real-world examples of how 340B helps hospitals stretch their dollars so they can serve more patients and provide more comprehensive services:
- University of Rochester Medical Center uses its 340B savings to provide free medications to patients in need, including oncology drugs.
- Seton Family of Hospitals in Austin, Texas, uses its $7 million in annual 340B savings to provide free medications, a nursing program in local public schools and a medical mission on weekends to the city’s poorest neighborhoods.
- 340B savings help Sutter Health in Sacramento, Calif., help pay for outreach to the indigent, including the Street Nurse program that provides free medications and medical services to the homeless.
As policymakers consider ways to address rising drug prices, we hope Congress keeps in mind that 340B helps mitigate the impact of high drug prices on hospitals and helps them reduce costs and provide critical services to their low-income and rural patients.
Contact Tom Mirga at tom.mirga@340bhealth.org or 202-552-5853.