NEW REPORT: DRUGMAKERS’ 340B REBATE SCHEMES THREATEN MASSIVE FINANCIAL HARM TO SAFETY-NET HOSPITALS
WASHINGTON, D.C.—A new national survey by 340B Health finds that proposed 340B drug pricing program rebate schemes from major drugmakers would impose crushing financial burdens on safety-net hospitals, impeding their ability to serve patients with low incomes and those in rural areas.
Five major drug companies: Bristol Myers Squibb, Eli Lilly, Johnson & Johnson, Novartis, and Sanofi, have proposed replacing upfront 340B discounts with post-sale rebate models for some or all their outpatient drugs. Rebates would force 340B hospitals to float millions of dollars to for-profit pharmaceutical companies to acquire 340B drugs at full price, then wait for drugmakers to process rebates using their own criteria and timelines. Hospitals also would need to pay substantial amounts for additional staffing and other administrative costs to comply with drugmaker requirements, money they would not recoup even if companies were to pay all legitimate rebate requests.
STUDY FINDINGS
Rebate schemes would require 340B hospitals to float millions of dollars to pharmaceutical companies.
- The average annual float per 340B hospital — reflecting the higher cost of purchasing 340B drugs at wholesale acquisition cost (WAC) — is estimated at $72.2 million for disproportionate share (DSH) hospitals and $1.7 million for critical access hospitals (CAHs).
- Among DSH hospitals, the average annual float would be $8.9 million for hospitals with fewer than 138 beds and $208 million for hospitals with more than 487 beds.
Total costs of rebate models, including administrative burdens and denials of legitimate rebate claims, could devastate hospitals and patient care if rebates were to expand throughout 340B.
- 93% of hospitals would face challenges maintaining current levels of uncompensated care.
- 92% would be forced to reduce the free and discounted drugs they provide at their pharmacies.
- 86% expect negative effects on their staffing, including layoffs and postponed hiring.
- 77% may be forced to close.
The following statement is attributed to 340B Health President and CEO Maureen Testoni:
“This new report should serve an important warning to policymakers and providers about the significant amount of harm to health care if these rebate models are imposed. These 340B rebate models would shift financial burden from highly profitable drug companies to hospitals with the fewest resources serving the most vulnerable patients. This is not reform, it’s a recipe for hospital closures, service cuts, and patients losing access to life-saving medications and critical care they need. Drugmakers should not be allowed to impose their 340B rebate schemes on 340B providers.”
Contact: Jon Tilton at jon.tilton@340bhealth.org or 202-536-2285