Congressional Medicare Advisers Say 340B Has Minor Effect on Cancer Drug Spending and Patient Cost-Sharing

Congressional Medicare Advisers Say 340B Has Minor Effect on Cancer Drug Spending and Patient Cost-Sharing

Do 340B drug discounts induce hospitals to furnish more-expensive drugs to treat cancer than they otherwise would, raising patients’ coinsurance obligations and the cost of cancer care overall?

Drug manufacturers, private oncologists who administer chemotherapy in their offices, and others who criticize 340B hospitals have argued for years this is so. They point to research by the Government Accountability Office (GAO), and some academics suggest they’re right. In addition, the Department of Health and Human Services Office of Inspector General (OIG) has quantified how much Medicare could save if it cut 340B hospitals’ drug reimbursement. 340B hospitals, meanwhile, point to other research suggesting that higher spending on drugs at 340B hospitals is due to the types of facilities they are and the types of patients they serve. Virtually all the research is plagued with limitations.

The Medicare Payment Advisory Commission (MedPAC) today released new research that could be the last word on the topic (commission staff previewed their findings during MedPAC’s meeting in January). 340B Report obtained a copy yesterday embargoed until 1 p.m. Eastern today. The findings are included in MedPAC’s March 2020 report to Congress, one of two such reports it makes to lawmakers every year.

With respect to “new” 340B hospitals (those that enrolled in 340B between 2013 and 2017), MedPAC found “no clear evidence of increased spending on cancer drugs attributable to the hospitals’ 340B status.”

What about among 340B hospitals overall? MedPAC conducted its analysis by studying drug spending on five types of cancer in markets for cancer care where 340B hospitals were major players. “This market-level approach overcomes concerns present in hospital-level analyses about possible differences in patient mix between 340B hospitals and other providers affecting the results,” the commission explained.

So, in market locations where a higher-than-average proportion of patients get cancer care in 340B hospitals, is drug spending higher at 340B hospitals? MedPAC found the answer is no for breast cancer, colorectal cancer, and leukemia/lymphoma.

MedPAC did find higher drug spending at 340B hospitals for lung cancer and prostate cancer.

For lung cancer, it said the reason appears to be because slightly more patients at 340B hospitals get high-cost immune-oncology products than patients treated at physician offices or non-340B hospitals. MedPAC, however, said it could not conclude “that the use of higher priced products for lung cancer was driven by 340B discounts because higher prices are not necessarily associated with higher 340B discounts.”

For prostate cancer, MedPAC said one reason for higher drug spending at 340B hospitals could be because the hospitals have a higher share of young patients, allowing for more aggressive cancer treatments. Another reason could be because 340B hospitals treat more low-income patients who qualify for Medicare subsidies that eliminate nearly all cost sharing for Part D drugs. As a result, patients who get care for prostate cancer at 340B hospitals might be more adherent to prescribed medications.

For both lung cancer and prostate cancer, however, 340B market share’s effects on drug spending “were much smaller than the effects of the general increase in oncology drug spending, which reflects both the effect of rising prices and shifts in the mix of drugs, including the launch of new products with higher prices,” MedPAC observed. “Given our findings on the relative size of the 340B effect for some cancers, the overall effect on beneficiary cost sharing is likely to be modest and vary by beneficiaries’ supplemental coverage.”

MedPAC did offer caveats to its findings. Because 340B ceiling prices are confidential, the study “did not examine whether drug profitability affected providers’ prescribing patterns.” Due to data limitations, it did not include other common cancer types. It did not examine whether 340B status has an effect on non-drug cancer services. It did not address the shift in cancer care away from physician offices and toward hospitals. And because the last year studied was 2017, it did not account for the effects of the nearly 30 percent cut in Medicare Part B drug reimbursement for 340B hospitals that began in 2018.

Forthcoming CMS Proposed Rule Could Affect Hospitals’ Past Medicare DSH Percentages

The Centers for Medicare & Medicaid Services (CMS) yesterday asked the White House Office of Management and Budget (OMB) to approve publication of a proposed rule on the calculation of hospitals’ Medicare Disproportionate Patient Percentage (Medicare DSH percentage).

Hospitals and CMS have been battling in court for years over CMS’s calculations. Apart from critical access hospitals, others must have and maintain a specified Medicare DSH percentage to become and remain eligible for the 340B program. Enrolled hospitals whose Medicare DSH percentages fall below the eligibility threshold become disqualified for 340B discounts.

We understand the forthcoming CMS proposed rule is expected to address the calculation of hospitals’ Medicare DSH percentage from October 2004 through October 2013. It is not known whether the proposal will, on balance, inflate or deflate hospitals’ Medicare DSH percentages. The Health Resources and Services Administration’s (HRSA) policy is to make 340B eligibility determinations based a hospital’s most recently filed Medicare cost report, so any revisions to the DSH percentage for these earlier periods should not impact the hospital’s 340B eligibility status during that period.

Drug Company Moves Thyroid Cancer Treatment into Specialty Distribution Channel

Drug manufacturer Excelixis yesterday informed 340B entities it is moving its oral thyroid cancer treatment Cometriq into the specialty drug distribution channel. The company posted the announcement on HRSA’s 340B program Manufacturer Notices to Covered Entities web page.

Tweets of Note

Dr. Stephen M. Hahn @SteveFDA: Today, @SeemaCMS & I had a great discussion with hospital & health system industry leaders across the U.S. & provided updates about #coronavirus disease diagnostic testing.  We are grateful for our nation’s health care workers during this very crucial time in public health.

Rena Conti @contirena1: Here’s to hoping @ahahospitals @340BHealth hospitals have been saving their millions in #340b revenue and are ready and able to provide #safetynet care @saynikpay @commonwealthfnd

340B Health @340BHealth: Today our members met with policymakers to share their stories of how #340B savings have been critical for providing low-income and rural patients with vital services such as trauma care and substance use disorder treatments.  #Protect340B