Lack of Transparency in 340B Program Leads to Lack of Access for Patients
More transparent drug pricing could improve patient care.
Pricing transparency has become an increasingly discussed issue in health care spending, with the United States spending 17.7% of its gross domestic product (GDP) on health care compared with similarly developed countries, which spend no more than 12%, according to a report from the Community Oncology Alliance (COA).
Such transparency is especially important with regard to the 340B Drug Pricing Program, which is designed to ensure access to comprehensive services for eligible patients who might otherwise be unable to receive adequate care as a result of high drug prices. Created in 1992, the program requires manufacturers to provide eligible hospitals with discounts on outpatient drugs. According to the COA report, although estimates of the discounts vary, the minimum discount is 23.1% and the average is 34.7%.
Eligibility criteria for 340B hospitals has also evolved, and the largest group of participants is now disproportionate share hospitals (DSHs), which represent 40% of all United States hospitals and were responsible for 78% of drugs purchased under the 340B program in 2015.
Despite the program’s intentions, the report noted that critics have pointed out several flaws, including a lack of oversight and accountability, aggressive attempts by hospitals to leverage their 340B status, the direction of discounts to the institution and not the patient, and a competitive disadvantage for community physicians. According to the COA report, more transparent hospital pricing could shed light on several of these problems.
In order to understand these concerns and develop a standardized price data set across all hospitals, analysts from COA selected 59 oncology treatment and supportive drugs based on a list of highest dollar expenditure for Medicare Part B drugs in 2019, as well as lower expenditure drugs sharing the same active ingredient. They also used a list of 1087 acute care 340B DSH hospitals, 890 of which had a price transparency file on their website.
Using these data, the researchers analyzed whether the hospitals attempted to comply with new transparency regulations from the US Department of Health and Human Services, which took effect January 1, 2021. If any data relevant to the new regulations were found in the file, the hospital was considered as “attempting to comply.” Notably, only 327 of the hospitals in the 340B program attempted to comply with the new regulations, according to the report.
Investigators then searched the files of these 327 hospitals and noted that some hospitals do not include drugs in the transparency file for several reasons, including the separate management of the organization of the files or the choice by some hospitals to eliminate certain drugs because of drug markup controversies and 340B drug discounts. Additionally, if the file mentioned any of the 3 most common oncology drugs—pembrolizumab, rituximab, or pegfilgrastim—they were considered to include drugs in the file. After this search, the researchers found that just 233 hospitals out of the 1087 340B hospitals included drug prices in the file.
Finally, the report said the investigators realized that some hospitals had not included data on individual negotiated payers, which is required by the new transparency law. Instead, they included only data on cash price, minimum, maximum, and chargemaster prices.
Just 123 hospitals included the individual plan names, which allowed them to be used to create the standardized price data set. The majority of these, however, did not provide well-organized and easy-to-understand data sets, according to the report. Instead, much of these data were “snapshots” from internal systems, according to the COA report. They included data that were unrelated to pricing, multiple entries for the same products, and cost modifiers, and the coding was inconsistent and reflected internal terminology that was difficult to understand.
Notably, the report found that the drug amount associated with the negotiated price was often unclear. Because the analysts’ goal was to create a standardized data set, they removed unreasonable data points and addressed duplicate entries, such as different dosages listed separately. The resulting database contains 52,180 data points across the 123 hospitals used for the analysis.
In addition to creating the standardized price data set, the report emphasized several recommendations to improve reporting data around hospital price transparency.
“The best solution, in our view, is for [the Centers for Medicare & Medicaid Services (CMS)] to create a database that it will own and manage,” the report said. “Hospitals, rather than publishing their own files, would upload the data to the CMS database based on the provided [Healthcare Common Procedure Coding System (HCPCS)] code and unit size.”
In addition to this far-reaching and structural recommendation, the authors also suggested amendments to CMS requirements in order to enforce more price transparency. First, they recommended a centralized data location to ensure easy access to files, rather than having hospitals post files only on their websites.
Second, the data qualification process should be strengthened, according to the report. A file should be readable and should have a standard format with the required minimum of data. Reviewing this data would encourage hospital compliance and would improve clarity about which hospitals provide the required data and which do not.
Another recommendation to improve data clarity is to report only negotiated price data instead of having what the report authors termed a “database dump” approach; no other data should be included.
Data standardization should also be improved, including a requirement to report products and services with their associated HCPCS codes and unit sizes. Product descriptions should be unique, and a single cell should be used for each data attribute, since the authors said they often saw a single cell describing the product, amount, health plan, and site of care. According to the report, hospitals should also use a standard nomenclature to indicate whether drugs are for inpatient or outpatient use and for which line of service. Finally, the report urged CMS to require specific data schema. Although the current requirements define which information should be published, they do not specify the X-Y organization, order of the data presented, headers, terminology, or naming convention, which makes it much more challenging to aggregate and compare the data from different hospitals.
In addition to helping industry companies achieve price transparency, the authors concluded that these changes are also essential for patients attempting to compare prices across several hospitals. Based on their findings of the current system, the authors said patients would be entirely unable to obtain and compare the cost of oncology drugs between local hospitals specific to their health plan, thereby limiting their ability to locate and access affordable care.
Community Oncology Alliance. Examining Hospital Price Transparency, Drug Profits, and the 340B Program. Released September 14, 2021. Accessed October 25, 2021. https://communityoncology.org/hospital-340b-drug-profits-report/