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New drug industry-funded research found that Part B drug administration continues rising at 340B hospitals and falling at other hospitals and physician offices.

340B Hospitals’ Share of Part B Drug Administration Continues Rising, PhRMA-Funded Study Finds

Thirty-five percent of drugs paid for by Medicare Part B in 2021 were administered in 340B hospital outpatient departments, up from 19% in 2012, new research funded by brand drug manufacturers shows.

The share of Part B drugs administered in physician offices fell from 62% in 2012 to 51% in 2021, and the share in non-340B hospital outpatient departments from 18% to 12%, the Dec. 15 study by Berkeley Research Group found.  The study was funded by PhRMA, the trade group for brand name drug manufacturers.

The overall site-of-service trend (drug administration up at 340B hospitals and down at non-340B hospitals and physician offices) held true for top-selling breast cancer drugs but not for top-selling rheumatoid arthritis or multiple myeloma drugs, BRG’s data show.

For breast cancer drugs, the trend was from 23% of drug administrations in 2012 to 45% in 2021 in 340B hospital settings, from 18% to 14% in non-340B hospital settings, and from 58% to 40% in physician office settings.

For rheumatoid arthritis drugs, drug administrations increased in 340B hospital settings (from 13% to 20%) and remained about the same in physician office settings (from 72% to 73%) but fell in non-340B hospital settings (from 14% to 6%).

For multiple myeloma drugs, drug administration increased in 340B hospital settings (from 19% to 46%), held steady in non-340B hospital settings (15%), and fell in physician office settings (from 64% to 38%).

The study is a follow-up to ones BRG published in 2019 and 2017.

To control for the nearly 30% reduction in Part B reimbursement for hospitals’ 340B-acquired drugs during 2018-2021, BRG said it expressed all the prices of all the Part B drug claims for all the years it studied (2012-2021) as average sales price. Not doing so “would have understated the portion of drug therapies administered” in the 340B hospital outpatient department setting, it said.

The U.S. Supreme Court in June declared the cuts for 2018 and 2019 illegal and the government has conceded that the cuts in 2020, 2021, and 2022 were illegal as well. A federal district court on Sept. 28 ordered the U.S. Centers for Medicare & Medicaid Services (CMS) to immediately begin to pay 340B hospitals the full Medicare Part B drug payment rate for the remainder of 2022. CMS says it will pay 340B hospitals at the standard ASP plus 6% rate in 2023. How it will handle repayments for 2018 through most of 2022 remains to be seen.

“The overall continued shift in site of care to the 340B HOPD setting underscores the rapid growth of the 340B program in the last few years,” BRG said. 340B hospitals’ ability to buy physician-administered drugs at a discount and bill at above acquisition cost with no restriction on how they may spend the resulting margin may be an “important driver of this shift,” it said.

PhRMA in its blog said, “Given that 340B hospitals mark up the price of medicines significantly more than physician offices, this shift in site of care is driving up costs for the entire system.”

The study was silent about what else may be driving the increase in drug administration in hospital outpatient settings, such as findings that younger and female doctors prefer hospital employment over owning and running a solo or small group practice.

Second Sight Solutions, a BRG spin-off, developed and hosts 340B ESP—the platform 18 drug manufacturers use to administer conditions on 340B pricing when entities use contract pharmacies.

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