340B hospitals and oncologists working in private practice have issued dueling reports about who profits unjustly in connection with the drug discount program.

340B Hospitals and Independent Oncologists Issue Dueling Reports on Drug Discount Program

Hospitals in the 340B program and oncologists working in private practice have issued dueling reports about who profits unjustly in connection with the drug discount program.

Hospital group 340B Health said its Sept. 15 report “finds the three major manufacturers of insulin in the U.S. are reaping additional profits” by denying or limiting 340B discounts when hospitals use contract pharmacies. “People with diabetes and the safety-net providers who care for them are bearing the brunt of the actions,” it said.

Physician group Community Oncology Alliance (COA) said its Sept. 14 report finds that “the nation’s so-called non-profit 340B charity hospitals make ‘a handsome profit’ marking up oncology prices to their patients and insurers.

340B Health and COA’s report come as the federal government and six drug manufacturers continue to fight in court over the U.S. Health Resources and Services Administration’s (HRSA) May 17 findings that the manufacturers’ denials or and restrictions on 340B pricing when entities use contract are against the law and must be stopped immediately, with entities getting repayments for overcharges. HRSA threated in the letters to impose hefty civil monetary penalties on the companies for noncompliance. Tomorrow will mark four months since HRSA made the threats, which it has not yet carried out.

340B Health Report

340B Health said these were its report’s key findings:

  • Three of the eight manufacturers limiting or prohibiting 340B discounts on drugs dispensed by contract pharmacies— Eli Lilly, AstraZeneca, and Sanofi—control more than 90% of the American insulin market.
  • Manufacturers’ 340B contract pharmacy policies disproportionately affect insulin and other diabetes drugs.
  • Of the top 10 diabetes drugs affected by the manufacturers’ pricing actions, nine are “penny-priced” when sold to a 340B covered entity.
  • Denying 340B discounts on 340B penny-priced diabetes drugs “dramatically increase[s] the cost of diabetes drugs to safety-net providers in the 340B program” and “increase[s] revenue and profits for the manufacturers during a time of record profits in the midst of the COVID-19 pandemic.”

“These companies have significantly raised prices and, one by one, are cutting access to required discounts. These actions must stop now,” 340B Health President and CEO Maureen Testoni said in a news release.

COA Report

COA has long argued that hospital participation in 340B has fueled cancer drug shortages, contributed to the decline of independent oncology practices, and drives up the cost of cancer care.

It said its new report found that 340B hospitals:

  • charge commercial insurers an average of 3.8 times their acquisition costs for the 59 oncology drugs chosen for the study (high Medicare Part B expenditure drugs, their biosimilar drugs, and generic equivalents)
  • do not provide lower prices for uninsured or cash paying customers
  • overwhelmingly fail to fully comply with federal hospital transparency regulations that went into effect this year.

“The health care system has proven resistant to change across multiple dimensions (electronic records, patient-generic settlements, etc.) and the arguments in favor of 340B institutions are well known,” the report concludes. “It usually requires legislative or regulatory changes modifying the ‘rules of the road’ to get a change to take place. One may be needed here to effectuate change.”

Soon after COA released the report, 340B Health posted a critique on its blog. “The report makes numerous errors that render the results inaccurate,” it said.

American Hospital Association Executive Vice President Stacey Hughes said on the AHA website that the COA report “once again tries to obfuscate the issue of sky-rocketing drug prices by choosing to blame hospitals rather than the drug companies who set the prices and enjoy double-digit profits at the expense of patients and the providers who serve them.”

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