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Health Affairs Study Gets It Wrong on 340B: Hospitals Use the Program to Help Vulnerable Patients and Communities

By Linda Fishman
October 6, 2014

The 340B program accounts for only two percent of the $325 billion in annual drug purchases made in the U.S., or roughly $6.5 billion. Hospitals participating in the 340B program provided $28.4 billion in uncompensated care in 2012 – in other words – four times the drug purchase amount. Furthermore, the uncompensated care provided by hospitals in the 340B program represented 62 percent of all uncompensated care provided by America’s hospitals in 2012.

Each day, hospitals across the U.S. fulfill their mission of improving the health of their communities by putting patients first. For more than 20 years, the 340B program has provided financial relief from high prescription drug costs allowing hospitals to stretch limited federal resources to reduce drug costs and expand health services to patients. Click here for case studies that illustrate the patient benefits of the 340B program.

However, a study published in this month’s Health Affairs, authored by individuals with known connections to the pharmaceutical industry, reaches incorrect conclusions about how hospitals are using the 340B Drug Pricing Program. The study design provides a questionable framework for analysis which does not focus on the geographic areas in which hospitals serve their communities.

The study authors also note there has been an increase in the number of 340B hospitals and clinics.  But, they ignore the effects of changes to the program since 2004.  Starting that year, the Medicare Modernization Act expanded the program to include rural and small urban hospitals by raising the cap on the Disproportionate Share Hospitals (DSH) adjustment. Subsequent laws expanded the program to include other hospital types. They also ignored the most obvious reason for the growth in reported hospital-based 340B clinics, which is the Health Resources and Services Administration’s new reporting system that requires hospitals to register all outpatient units on their Medicare cost report as 340B sites.

The authors themselves state on page 3 that “[c]ommunities with 340B DSH hospitals had significantly higher poverty rates and lower unemployment and mean and median household incomes, compared to national averages…” In addition, the data show only small differences in the socioeconomic factors of communities served by DSH hospitals and by hospital-affiliated outpatient clinics that registered for the 340B program prior to and after 2004. The authors actually show that communities with 340B hospitals and clinics have a higher percentage of uninsured individuals (exhibit 2).

This report does a real disservice to this important program that has a proven track record in helping patients get the medicines they need.   

Tag: 340B

Linda E. Fishman is the Senior Vice President of Public Policy at the American Hospital Association.

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