25 Jan AAMC: Preserving Critical Support for Vulnerable Patients: The 340B Drug Pricing Program
“Congress created the 340B program in 1992 under the Public Health Service Act to protect safety net hospitals from escalating drug prices. The program was designed to allow certain safety net hospitals and other covered entities to purchase outpatient drugs at a discount from drug manufacturers “to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” The program provides vulnerable patients and communities access to life-saving services at no cost to taxpayers because the financial support hospitals receive is derived from drug manufacturer discounts.
Despite bipartisan support from a majority of representatives and senators, in the Calendar Year (CY) 2018 Outpatient Prospective Payment System (OPPS) final rule, the Centers for Medicare and Medicaid Services (CMS), cut Medicare payments for drugs provided by 340B safety net hospitals from average sales price (ASP) plus 6% to ASP minus 22.5%. This amounts to a cut of $1.6 billion a year to 340B hospitals, beginning in 2018.
This policy change will not help curb high prescription drug prices. While it is critical that policymakers take steps to make prescription drugs more accessible and affordable, reducing Medicare payment rates for prescription drugs in the 340B program is not a solution to this important issue. According to the agency that administers the program, the Health Resources and Services Administration (HRSA), 340B sales are less than three percent of the total U.S. drug market.”