Numerous health care leaders are concerned about a new pilot program that they say could threaten the future of the 340B drug pricing program.
“This is going to be a fundamental shift in the program, because we’re going to move away from that upfront discount program to a post-purchase rebate,” Dr. Urshlila Shah, former chief pharmacy officer at St. Joseph’s Health in Paterson, N.J., told Becker’s Hospital Review. “And this is going to be an administrative and an operational nightmare.”
The program was designed to enable health care organizations to purchase outpatient drugs at significantly reduced prices, which helps them provide care for low-income and uninsured patients.
Hospital use has tripled to more than 53,000 sites since the program was created, and in 2023, the program reached a record $66.3 billion in outpatient drug purchases. Employers, working families and taxpayers are shouldering a significant cost of the program’s expansion, while the program is failing to sufficiently benefit the vulnerable patients it was intended to serve, according to a research paper published by the American Benefits Council.
Drugmakers sought new restrictions, such as limiting the use of contract pharmacies and testing rebate-based alternatives to traditional discounts. The pilot program, which was announced by the federal Health Resources and Services Administration in August, invited manufacturers to test alternative 340B discount models that replaced traditional upfront discounts with rebates after the sale.
A bipartisan group of 132 lawmakers recently expressed their concerns in a letter to HHS Secretary Robert F. Kennedy Jr.
“Congress intended the 340B program to enable the nation’s safety-net providers to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services,” they wrote. “An unchecked rebate model would severely undermine that purpose. We urge you to abandon the Rebate Model Pilot Program, or if the program must move forward, to proceed with the utmost caution and impose stronger guardrails to ensure the 340B program is not entirely dismantled.”
Maureen Testoni, president of 340B Health, shared her group’s concerns.
“Our recent analysis shows that shifting to rebates for all 340B drugs would force each disproportionate share hospital to front an average of more than $72 million to drug manufacturers while waiting for rebates, straining their ability to deliver critical care services,” she said. “340B rebate models shift financial burden from highly profitable drug companies to hospitals with the fewest resources serving the most vulnerable patients.”
The American Medical Association also expressed opposition a letter to the Federal Trade Commission. “Safety net providers operate on razor-thin margins,” it said. “The rebate pilot would destabilize these institutions, directly threatening access to affordable medications for patients.”
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