Another New Study of Differences in Cancer Drug Spending Could Have 340B Implications
On Friday, the nonpartisan Medicare Payment Advisory Commission (MedPAC) made headlines (see story below) when its staff said it could find no link between evidence of 340B hospitals’ higher spending on drugs to treat prostate and lung cancer and incentives created by 340B discounts. The MedPAC report is expected to include an examination of the effects of patient characteristics on drug spending, something that past research on the subject has struggled to tease out.
Another new study just out from the Employee Benefit Research Institute (EBRI) finds that hospitals (340B and non-340B) charge private payers more for cancer drugs than physician offices. This study was funded by the pharmaceutical and insurance industries and others. In contrast to MedPAC, EBRI suggests the connection between 340B status and higher charges is strong. Look for the drug industry and its allies to say policy makers should listen to EBRI, ignore MedPAC, and scale 340B back.
The EBRI study looks at cost differences between hospital outpatient departments (HOPDs) and physician offices (POs) on infused cancer drugs paid for by private third-party payers. (The study was paid for by Aon Hewitt, Blue Cross Blue Shield Association, ICUBA, JP Morgan Chase, Mercer, Milliman, Pfizer, and PhRMA.) Unlike the MedPAC study, the EBRI researchers deliberately did not try to control for differences in patient characteristics, noting that “data limitations constrain researchers’ ability to match cancer patient characteristics across sites of care.” Instead, they said, “using a novel analytical approach, we distinguish between differences in HOPD and PO oncology medicine costs due to price differences in drug mix and annual dosage levels. The method allows us to estimate the aggregate extra spending in HOPDs that is unrelated to patient care without having to directly account for patient characteristics.”
The key findings:
Hospital prices for the top 37 infused cancer drugs averaged 86.2 percent more per unit than in physician offices.
For every drug examined, HOPDs charged more on average with statistically significant relative differences ranging from 128.3 percent (nivolumab) to 428.0 percent (fluorouracil).
The mean annual reimbursement to providers per user of infused cancer drugs was $13,128 in POs and $21,881 in HOPDs.
Had hospital unit prices matched physician office prices, holding drug mix and treatment intensity constant, EBRI researchers estimate that commercial insurers would have saved $9,766 per user of these medicines in 2016, a savings of 45 percent.
The researchers said they “make no claims about potential qualitative differences in cancer care or outcomes in POs vs. HOPDs. There may well be differences in quality of care by type of setting. Hospital campuses clearly have greater resources available in the event of treatment failure or other adverse reactions from therapy.” But, they say, much hospital cancer care today is not provided in hospitals, but instead in former physician practices bought by hospitals and converted into HOPDs. While there are several factors driving these purchases, “perhaps most important the expansion of the 340B Drug Pricing Program under the Affordable Care Act in 2010 [which] permitted more hospitals to purchase medicines at significantly discounted prices.” (340B hospital advocates will point out that the primary beneficiaries of ACA expansion are rural hospitals, many of which do not have extensive cancer programs but are dependent on 340B to stay afloat. They will also point out the importance of including patient characteristics in this type of analysis.)
“Since these discounts are not available to independent physician practices, 340B provides an extra incentive for oncologists to sell their practices to hospitals,” the EBRI study says. “These factors combine to form a perfect recipe for increasing price disparities in cancer treatment by site of care, further adding to the growing cost burden shouldered by the U.S. health care system. The trend is likely to continue unless vigorously challenged.”
Update: MedPAC’s New 340B Analysis
Modern Healthcare (subscription required), Healthcare Dive, Fierce Healthcare, and Healthcare Finance published articles about the Medicare Payment Advisory Commission (MedPAC) staff’s report to the commission Jan. 17 that although there’s evidence of slightly higher drug spending at 340B hospitals for lung and prostate cancer, incentives created by 340B discounts appear not to be the reason. Hospital group 340B Health released a statement late Friday calling MedPAC’s findings “thoughtful” and its analysis “rigorous.”
During the commission meeting, MedPAC Executive Director James Mathews pointed out that prior studies that found that 340B hospital spend more on cancer drugs than other providers have been criticized for not sufficiently controlling for patient characteristics. The MedPAC staff study looks at such characteristics, he said, one of which is “that patients treated at 340B hospitals tend to be somewhat younger and may be candidates for more aggressive interventions.”
“The 340B Drug Pricing Program doesn’t create strong incentives for participating hospitals to use more expensive drugs, according to new federal research,” Modern Healthcare reported. “The higher spending at 340B hospitals seems to be driven by the type of cancer that people are treated for rather than 340B’s financial incentives….Participating hospitals, including many academic medical centers, are more likely than non-340B hospitals to care for younger patients that are candidates for more aggressive cancer treatments. They’re also more likely to use more advanced and expensive therapies than hospitals that don’t participate in 340B.”
Healthcare Dive reported that the findings “throw cold water on big pharma’s perennial complaint that the program, established in 1992 to lower drug prices for safety net hospitals, is a major driver of healthcare spending…. Powerful trade group PhRMA has been actively trying to shift public opinion on 340B through a barrage of reports and studies over the past few years.”
“The study will be finalized and likely included in MedPAC’s March report to Congress,” Fierce Healthcare reported. “It comes with some caveats, including a small sample size and that it did not examine the impact of a 22.5 percent cut to 340B payments that went into effect in 2018….
Despite the caveats, MedPAC’s findings could play a major part in lawmaker deliberations on the program, which some Republicans claim has gotten too big and led to hospitals bilking the federal government.”
“The 340B drug discount program has been a source of controversy, with the pharmaceutical industry claiming that it’s one of the main drivers of rising healthcare spending. But a study from the Medicare Payment Advisory Commission challenges that assertion, finding that its effect on cost sharing for patients is minimal,” Healthcare Finance reported.
“The thoughtful analysis MedPAC presented today sheds important light on the role 340B hospitals play in treating people living with cancer,” said 340B Health President and Chief Executive Officer Maureen Testoni in her association’s statement. “MedPAC’s rigorous approach focusing on specific types of cancer finds only small per-beneficiary spending differences between 340B and non-340B hospitals. MedPAC noted these differences could stem from the fact that 340B hospitals use more advanced treatments and serve younger cancer patients who often require more aggressive treatments. As an integral component of the health care safety net, 340B hospitals have a proportion of Medicare-Medicaid dual-eligible patients that is more than 40 percent higher than non-340B hospitals. This also is a contributing factor to higher patient complexity and cost at 340B hospitals.”
Trump Wants More Action from Azar on Drug Prices
The New York Times, The Washington Post, Politico, and other news outlets reported last week that President Trump called Health and Human Services Secretary Alex Azar during a Jan. 16 Oval Office meeting with his presidential campaign advisers to ask Azar why prescription drug prices remain high. The president reportedly was upset about opinion polls showing that the public trusts Democrats over Republicans on health care.
The administration’s nearly 30 percent cut in Medicare Part B drug reimbursement for 340B hospitals is one of the few actions HHS can point to on the drug pricing front. The Post reported that, during the call, Azar told the President “he was doing everything he could but that much of his work was being stopped or hampered.”
BIO Weighs in on GAO’s Recent 340B Report
The GAO’s finding earlier this month that some ineligible hospitals may be getting 340B drug discounts due to lax program oversight “is just the latest example in a growing list of concerns that the program has expanded well beyond the intent of Congress, is poorly managed, and is susceptible to abuse,” biotech industry trade association BIO says in a Jan. 16 blog post.
“While participating hospitals claim to support ‘a thoughtful conversation about the transparency of the 340B program,’ they have consistently opposed all efforts to introduce any accountability for how they use program savings,” the group said. “It’s time for Congress to step in and take action to refocus the program to its original intent, to provide low-income, uninsured, and underinsured patients access to medicines— instead of boosting hospital profits at the expense of those in need.”
Study Describes How 340B Lets Hospital Provide Discharge Prescriptions
A new paper in the January 2019 issue of Research in Social and Administrative Pharmacy describes how 340B drug discount pricing enables the University of Maryland Medical Center to provide bedside medication delivery services for patients at the time of discharge from an inpatient admission. One of the authors, Joey Mattingly, associate professor at the University of Maryland School of Pharmacy, is the latest person profiled in hospital group 340B Health’s ongoing Faces of 340B series.
The paper says the bedside medication delivery service generated a profit of $11,030 for the hospital in its first month—money that can be reinvested in better patient care. Without 340B price discounts, the service would operate at a loss.
In the 340B Health profile, Mattingly says 340B savings also enable the hospital to provide free antibiotics to certain emergency room patients cannot otherwise afford them. If the 340B program went away, he said, “that might mean hiring fewer staff and having fewer programs that are available for our citizens in downtown Baltimore.”
Ex-Rep. Chris Collins Sentenced to 26 Months in Prison
Former Rep. Chris Collins (R-N.Y.), who pled guilty to insider trading charges linked to his owning stock in and being on the board of a biotech company, was sentenced on Jan. 17 to serve 26 months in prison. While in Congress, Collins was a leading advocate for reducing hospital participation in 340B.
Experimental Hemophilia Treatment Could Cost Between $2 Million and $3 Million
The Wall Street Journal reports that BioMarin Pharmaceutical Inc. is exploring pricing its experimental gene therapy for hemophilia patients between $2 million and $3 million if it is approved, “which could make it the most expensive drug in the world.” The current most-expensive drug in the world—Zolgensma, a gene therapy for spinal muscular atrophy—costs $2.1 million.
Hemophilia treatment centers are one of the types of federal grantees eligible for the 340B program. According to a June 2018 medical journal article, in 2015 it cost an average of about $59,000 per year to treat individuals with mild hemophilia and about $300,000 a year to treat those with severe hemophilia. In clinical trials, patients who received BioMarin’s experimental injection saw their bleeding episodes drop from an average of 16.5 to an average of zero, an impact that was sustained for three years.
“Payers seem to be comfortable in the U.S. around $2 [million] to $3 million,” BioMarin Chief Executive Jean-Jacques Bienaimé told the Journal in an interview at the J.P. Morgan Healthcare Conference, saying that the overall cost of care of hemophilia patients will drop.
Easy Sign-Up for HRSA’s 340B Email Notifications
You can now register to receive the Health Resources and Services Administration’s periodic 340B News and Manufacturer Update emails on the Office of Pharmacy Affairs homepage. OPA added the Email Sign-Up feature on Jan. 10. Look for the box toward the bottom of the page’s right sidebar.
Tweets of Note
@340BHealth: New analysis from @medicarepayment suggests increased spending on treatment for certain types of cancer at safety-net hospitals was “unable to be attributed” to #340B but instead to factors such as the types of cancer treated. Our statement: https://bit.ly/2G1zTUU #Protect340B
@MatthewPharr: Not funded by pharma or providers, would like to see more studies like this. MedPAC finds #340B effect on pricing ‘modest,’ going against pharma critique | Healthcare Dive https://t.co/HCdKrkI5MB?amp=1
@RebeccaMPifer: The 340B program correlated with a “modest” increase in cancer drug prices in a new @medicarepayment report, clapping back against a common @PhRMA critique of the drug discount scheme: that it’s unsustainably expensive. https://t.co/10xFL5tbpX?amp=1
@mbradyreports: While a @medicarepayment study found that 340B hospitals don’t have incentives to buy more expensive drugs, it didn’t account for differences in disease progression or a critical change in 340B payments. #healthcare https://bit.ly/2uZVdb8 via @modrnhealthcr
@TSlafsky: (Commenting on @mbradyreports) New @medicarepayment study finds #340B doesn’t create incentives to use pricey cancer drugs. #340B population could attribute to slightly higher spending on #lungcancer and #prostate cancer treatment. Read more in @mbradyreports piece in @modrnhealthcr
@Matt_R_Fisher: #Medicare Payment Advisory Commission suggesting that 340B not increasing #healthcare cost. Contrary to many statements. Feels like many concepts get challenged at some point. https://bit.ly/30EWoIz
@AndyWilson340B: Archbow Consulting calls out “manag(ing) the impact of #340B on gross-to-net calculations and its negative effect on overall profitability” in 2020 Top Ten Drug Distribution Trend list. https://ow.ly/dumC50xYVOt
@IAmBiotech: New report on the 340B Drug Discount Program shows it does not “provide reasonable assurance” that participating hospitals meet eligibility requirements. See what the
@USGAO specifically found: https://buff.ly/2TwLOlz
@roncohenshair: (Commenting on @IAmBiotech) The #340B #drug discount program has become a boondoggle for #hospitals, which provide less and less care to the low-income populations #340B is supposed to serve.
@AIR340B: A new @NEJM study finds patient experiences worsen after consolidation and hospital acquisitions. #340B drives hospital consolidation, reducing access and raising costs. Fixing #340B will help improve patient outcomes. Learn more: https://bit.ly/2N1YL2L #WhoIsBenefiting?
@340BHealth: .@ruralhealth shares that the number of patients unable to pay their hospital medical bills has gone up 50% in the past decade. #340B helps hospitals cover this gap. Learn how: https://bit.ly/2sAESsJ #Ruralhealth #Protect340B
@340BHealth: .@JAMAOnc research: Ethnic minority patients who are uninsured or who have public coverage are more likely to receive later diagnoses of breast cancer. #340B boosts access to breast cancer screenings for underserved patients https://bit.ly/372FAxO #Healthdisparities #Protect340B