Consequences of the 340B Drug Pricing Program

Abstract

BACKGROUND The 340B Drug Pricing Program entitles qualifying hospitals to discounts on outpatient drugs, increasing the profitability of drug administration. By tying the program eligibility of hospitals to their Disproportionate Share Hospital (DSH) adjustment percentage, which reflects the proportion of hospitalized patients who are low-income, the program is intended to expand resources for underserved populations but provides no direct incentives for hospitals to use financial gains to enhance care for low-income patients. METHODS We used Medicare claims and a regression-discontinuity design, taking advantage of the threshold for program eligibility among general acute care hospitals (DSH percentage, >11.75%), to isolate the effects of the program on hospital–physician consolidation (i.e., acquisition of physician practices or employment of physicians by hospitals) and on the outpatient administration of parenteral drugs by hospitalowned facilities in three specialties in which parenteral drugs are frequently used. For low-income patients, we also assessed the effects of the program on the provision of care by hospitals and on mortality. RESULTS Hospital eligibility for the 340B Program was associated with 2.3 more hematologist–oncologists practicing in facilities owned by the hospital, or 230% more hematologist–oncologists than expected in the absence of the program (P = 0.02), and with 0.9 (or 900%) more ophthalmologists per hospital (P = 0.08) and 0.1 (or 33%) more rheumatologists per hospital (P = 0.84). Program eligibility was associated with significantly higher numbers of parenteral drug claims billed by hospitals for Medicare patients in hematology–oncology (90% higher, P = 0.001) and ophthalmology (177% higher, P = 0.03) but not rheumatology (77% higher, P = 0.12). Program eligibility was associated with lower proportions of low-income patients in hematology–oncology and ophthalmology and with no significant differences in hospital provision of safety-net or inpatient care for low-income groups or in mortality among low-income residents of the hospitals’ local service areas. CONCLUSIONS The 340B Program has been associated with hospital–physician consolidation in hematology–oncology and with more hospital-based administration of parenteral drugs in hematology–oncology and ophthalmology. Financial gains for hospitals have not been associated with clear evidence of expanded care or lower mortality among low-income patients. (Funded by the Agency for Healthcare Research and Quality and others.)

Relationship between initiation of 340B participation and hospital safety‐net engagement

“…Our results are partially consistent with anecdotal reports suggesting increased safety‐net engagement, 52 yet we found no support for the claims that 340B results in the offer of high‐value, low‐profit services, at least in the first several years after participation. They are partially consistent with Desai and McWilliams, 4 who found no effect on uncompensated care. Our results also lend support to recent evidence that hospitals may manipulate the DSH patient percentage in order to qualify for 340B 39 …”

“…Several identification strategies have been proposed to study the effects of 340B, including safety‐net engagement. Leveraging the fact that eligibility for 340B is based solely on having an adjusted DSH patient percentage >11.75 percent, Desai and McWilliams 4 use regression discontinuity to compare hospitals on either side of the 340B eligibility threshold. They find that hospitals just above the cutoff are more likely to consolidate with physicians who administer expensive 340B‐eligible drugs and spend no more on uncompensated care than hospitals just below the threshold 4 .…”

The unintended consequences of the 340B safety‐net drug discount program

“…This discrepancy did not appear to be explained by health status differences but implies that the 340B sites on average either dispensed a higher quantity of prescription drugs or more expensive drugs. Over the same time period, 340B eligibility was associated with significantly more Part B drug claims billed per year in hematology‐oncology (90 percent increase, P = .001), ophthalmology (177 percent increase, P = .03), and rheumatology (77 percent increase, not significant at P = .12) …”

“…In one paper examining the highest‐volume medical specialties in Medicare in 2012 and 2013, medical oncology had the highest proportion of hospital outpatient department (HOPD) billing in 2012 and 2013 (35.0 percent and 38.3 percent, respectively) and the greatest absolute change (3.3 percent) between the years . Another study found that hospitals eligible for the 340B program had more hematologist‐oncologists (230 percent more) compared to non‐340B participating hospitals …”

“Like heart valve clinic, it probably saves lives, but… Who has time for that?” The challenge of disseminating multidisciplinary cancer care in the United States

“…13 In this age of a shift toward value-based care, any preferred model of care delivery must be supported by high-quality evidence of benefit. Providers, health care systems, even not-forprofit systems (yes, even academic health care systems), and commercial payers function relatively independently, and competitively, sometimes fiercely so.…”