Pharmacy Times interviewed Melody Chang, RPh, MBA, BCOP, vice president of pharmacy operations at American Oncology Network, LLC, on the 340B Drug Pricing Program and its impact on community oncology. Chang describes how the 340B program’s growth has influenced on the landscape of cancer care, and how it raised concerns about treatment access and affordability.
Key Takeaways
- 340 Drug Pricing Program’s Evolutions: The 340B Drug Program, which was established in 1992, aimed to provide discounted outpatient drugs to eligible health care organizations to serve low-income and underinsured or uninsured patients. Initial growth was slow, with around 500 participating hospitals being involved after more than a decade, but the due to changes resulting in hospitals treating Medicaid patients making them eligible for the program, growth increased to 2500 hospitals.
- Changes Impacting Community Oncology Practices: In 2018, The Centers for Medicare and Medicaid Services implemented changes that reduced Medicare payment for 340B drugs. This was seen as beneficial for community oncology, as it decreased the incentive for 340B hospitals to acquire community practices and lowered out-of-pocket costs for patients; however, the proposed 2024 Hospital Outpatient Payment System may reverse these changes by removing the cap and continuing to reimburse 340B drugs at a higher rate, potentially disadvantaging independent community oncology practices.
- 340B Program’s Impact on Drug Shortages and Cancer Care: The 340B program has faced skepticism for potentially contributing to drug shortages. Chang describes how it the program was believed to motivate hospitals to hoard drugs and dissuade generic drug companies from necessary investments. Chang also notes that without access to discounted drug prices, community oncology practices struggled to compete with hospitals which led to closures or buyouts by hospitals, shifting the landscape of cancer care delivery.
Pharmacy Times: In the American Oncology Network’s perspective, how has the 340B Drug Pricing Program fared in terms of reaching its stated goal of enabling covered entities to stretch scared federal resources as far as possible, reaching more eligible patients and providing more comprehensive services?
Melody Chang: The 340B [Drug Pricing] Program was created in 1992, and it is a federal government program that requires the drug manufacturers who participate in Medicaid to provide outpatient drugs at a discounted price to eligible health care organizations in the covered entity. And the intent is to enable the covered entities [to] reach more low-income, under, or uninsured patients and provide a more comprehensive service. But there are no legal obligations for the 340B hospitals to provide charity care, and it [is] not required that the 340B hospital must treat the low-income, under, or uninsured patients. And there is no clear definition of eligible patients who qualify for the program, and most importantly, there is no transparency about how the money actually flows. [If it] is the discount passed down to the patient, or is it benefiting [the] hospital financially, we don't know. But at the beginning, the program actually grew slowly—but fulfilled its mission—and there were only about 500 hospitals participating after more than a decade.
In 2004, after the program established that there's only 500 hospitals, due to the changes in the Affordable Care Act in 2010, many people enrolled in the Medicaid program and more hospitals were treating Medicaid patients and making them eligible for the 340B program. In order to be eligible for the program, the hospital had to treat a certain percentage of [the] underserved community, and the Medicaid patients they were treating is a proxy for whether they are serving underserved populations or not. So, by 2019, the program had exploded in size and in scope [and] there were 2500 hospitals at that time, with drugs purchased reaching 30 million [people]. So, the 340B program has evolved over the past 30 years, and now [240B Drug Pricing Program] is that second largest federal prescription drug program, behind only Medicare Part D program…1 estimate from the Berkeley Research Group projects [is] that by 2026, 340B will be the largest federal drug program. So, it would be good if all this money was actually used to help low-income or underinsured patients, right? According to [a] Government Accountability Office report, about half of the covered entities provide no discount to low-income or uninsured patients on 340B drugs. And a resource from the Alliance for Integrity and Reform [on] 340B found 64% of the 340B hospitals have charity care rates below the 2.2% national average for all hospitals. So, for that, I don't think the 340B program reaches its goal, unfortunately.
Pharmacy Times: Have there been any recent updates in the 340B Drug Pricing Program that have impacted the American Oncology Network?
Chang: Going back to 2018, [The Centers for Medicare and Medicaid Services] (CMS) implemented changes to the [Hospital Outpatient Prospective Payment System]…and by reducing Medicare payment for the 340B drugs from [average sales price] (ASP) plus 6% to ASP minus 22.5%, and we were delighted to see that happen. It is beneficial for community oncology because it decreases the financial incentive for the 340B hospital to acquire community practices. Additionally, it is a positive development for patients as well since it will lower their out-of-pocket cost, because the patient co-pays are based on the reimbursement claim. But within the proposed 2024 Hospital Outpatient [Prospective] Payment [System], we see [that] CMS is proposing to remove the cap and to continue to reimburse 340B drugs at the ASP plus 6%. I think this will fill the roles of the large 340B hospitals, again, at the expense of independent community oncology practice…as well as of course, some small rural hospitals that serve many vulnerable patients.
