Congratulations to John Rother of the National Coalition on Health Care, who wrote a great piece about 340B in Morning Consult on March 5. The 340B program, he says, gives safety-net hospitals and other providers “a safe haven” from the drug industry’s “worst overpricing practices.”
“The anti-340B campaign is fundamentally a means to distract lawmakers from the fact that current drug prices are unsustainable,” he writes. Read his complete essay here.
The National Coalition on Health Care takes the lead in the Campaign for Sustainable Rx Pricing, an umbrella group dedicated to finding market-based solutions to the problems caused by the onslaught of new high-priced prescription medicines. Before joining NHNC, Rother was an executive vice president of AARP.
Much noise has been made by critics about the number of hospitals in the 340B drug discount program. Indeed, the number has doubled since 2010. Before you assume the worst, know this: Almost all of the newcomers are tiny rural hospitals with 25 beds or less. These facilities (plus three freestanding cancer hospitals) account for only 3 percent of annual 340B drug spending.
The number of DSH hospitals in the program has, in fact, dropped 4 percent since 2012.
Hospitals welcome Congress’s interest in 340B, but they ask lawmakers to “let the regulatory process work” before doing anything to the drug discount program, the head of the group representing 340B hospitals writes in the March 5 edition of The Hill.
The essay by Ted Slafsky, president and CEO of Safety Net Hospitals for Pharmaceutical Access, was timed to run on the same day as a U.S. House subcommittee hearing on 340B. The hearing, however, was cancelled due to a snowstorm and has yet to be rescheduled.
Slafsky notes that the Department of Health and Human Services is expected to release 340B program guidance this spring and says hospitals are confident it will deliver the clarity that all stakeholders seek. “The 340B drug discount program helps safety-net hospitals treat thousands of needy patients every day across America,” Slafsky concludes. “There is no need to tinker legislatively with a program that means so much to so many.” Click here for the complete essay.
A brickbat often heaved at 340B hospitals is that the drug discounts they get give them an unfair competitive advantage over private cancer clinics. These critics conveniently neglect to mention that many private cancer clinics cherry pick their patients while 340B hospitals treat all who walk through their doors regardless of ability to pay.
A new study by KNG Health Consulting for the American Hospital Association sheds more light on the matter. It found that patients receiving care in hospital outpatient departments are poorer and sicker than those receiving care in physician offices.
Relative to patients seen in physician offices, patients seen in hospital outpatient departments are:
- 250 percent more likely to be uninsured, covered by Medicaid, or eligible for charity care;
- 180 percent more likely to be eligible for both Medicare and Medicaid;
- 180 percent more likely to live in high-poverty areas;
- 170 percent more likely to be black or Hispanic; and
- 150 percent more likely to live in areas with low rates of college education.
The study also finds that patients treated in hospital outpatient departments tend to have more severe chronic conditions and, in the case of Medicare patients, have higher prior utilization of hospitals and emergency departments.
Kudos to Dr. Bruce Siegel for his commentary in Modern Healthcare explaining why 340B savings should stay where they belong—with patients and communities.
Allowing 340B savings “to revert to drug companies, or to go toward other uses, would pull the thread of the 340B program and unravel the fabric of essential health services for entire communities,” writes Siegel, the president and CEO of America’s Essential Hospitals. Siegel also serves on the board of Safety Net Hospitals for Pharmaceutical Access.
Hospitals that commit to caring for low-income and other vulnerable patients provide communities with highly specialized care often unavailable from other hospitals, he points out. They also train large numbers of health professionals, provide vital public health services, and support clinics that expand access to outpatient care, he adds.
“These are the services we put at risk if essential hospitals lose their 340B program savings,” Siegel says. “Our hospitals operate with the narrowest of margins or at a loss, so every dollar saved counts.”
“In the end, we face a choice: side with communities by keeping 340B discounts where they belong—with patients and safety net hospitals—or chip away at support of care for the vulnerable and put everyone at risk,” Siegel concludes. “Returning an incremental profit to drugmakers or using 340B savings for other purposes equates to more hospital cuts—and higher costs, poorer health and lowered productivity in communities across the country.”
Click here for the complete essay.
Big Pharma says that lost profits from the 340B drug discount program impact investments in research and development. Really? That doesn’t square with a new Vox infographic that shows nine out of 10 major pharmaceutical companies spent far more on sales and marketing than R&D in 2013.
Johnson & Johnson spent $8.2 billion on research and development but blew more than twice as much on sales and marketing – a whopping $17.5 billion. In fact, in 2012, “pharmaceutical companies spent more than $24 billion marketing to doctors,” says Vox. That’s more than three times the size of the entire 340B program.
Meanwhile, many of the nonprofit hospitals that comprise the 340B program struggle to keep their doors open. Research and development are important for drug innovation and improving healthcare, but it’s not the 340B program that’s tying up these dollars. It’s the drug industry.
At a time when Medicaid and Medicare reimbursement rates continue to shrink, reducing or eliminating 340B could cripple safety net providers across the U.S., the president of the Institute for Healthcare Innovation writes today in Healthcare Finance.
“Without a strong and vibrant 340B program, safety net providers may not be able to afford high-priced medications developed by pharmaceutical manufacturers to address the growing needs of chronically ill Americans,” says Jeffrey Lewis. “Many patients with hepatitis C, HIV/AIDS, COPD, multiple sclerosis and asthma, for example, would have to go without lifesaving medications. The challenge, indeed the opportunity, is to create a solution that modernizes the existing 340B infrastructure.”
Covered entities should do more to “explain how 340B program savings are used and whom it benefits,” he says. “The challenge is to use Congressional oversight to explore the value of the program and explain in public hearings and on the floor of the House and Senate that the program needs to be bolstered. Town Hall Meetings should be held all across America, where Federally Qualified Health Centers, Disproportionate Share Hospitals (that often reside in America’s toughest neighborhoods) and rural clinics have helped keep communities alive by providing needed medical care.”
Click here for the complete article.
The drug industry and its surrogates love to repeat the ridiculous line that the 340B drug discount program “is being exploited by rich hospitals to boost their bottom lines.” Drug companies, they claim, are “incurring heavy losses from 340B abuse,” as one drug company apologist recently put it.
SNHPA has created an infographic that sets the record straight. It compares the Top 12 Fortune 500 drug companies’ profits with the average operating margin for U.S. nonprofit hospital systems. We encourage you to circulate it widely.
So, what’s the real bottom line when it comes to 340B and profits?
Nonprofit hospital systems are struggling to stay above water. Their average operating margin is 2.2 percent.
That’s hardly a portrait of rich, exploitative hospitals, is it?
And how are big drug companies faring? Pfizer’s profit margin is above 40 percent. Gilead Sciences, the infamous maker of the $1,000-a-dose drug Sovaldi, has a profit margin above 25 percent. Amgen, Biogen Idec, Celgene, AbbVie, and Lilly all have margins above 20 percent.
Pfizer is “padding its bottom line” (to borrow phrase from Big Pharma) with more than $22 billion in profits. Johnson & Johnson is “pocketing” nearly $14 billion, Amgen more than $5 billion, and Lilly, AbbVie, and Merck all more than $4 billion.
Around $330 billion is spent on prescription drugs in the U.S. annually. Total sales through the 340B program add up to around $7 billion, or about 2 percent of the U.S. market.
And drug companies complain that they are incurring “heavy losses” from 340B abuse?
It doesn’t pass the smell test.