Opinion: CMS 340B Reimbursement Cuts Cause Big Pharma Profits While Underserved Patients Lose


The Centers for Medicare and Medicaid Services finalized a ruling that slashes reimbursement rates on drugs that qualify under the 340B program.

As you and your readers may now be aware, the 340B Drug Pricing Program has been under siege for the past couple months. The program requires drug manufacturers to provide outpatient drugs to eligible health care organizations at significantly reduced prices, so that those savings can be passed on to the patients and the community at large.

Henry Ford Health System is one of the largest, if not the single largest 340B entity in the nation and serves thousands of disadvantaged patients in the metropolitan Detroit and Jackson areas in Michigan every year. As Director of Finance and Contracts and 340B Compliance Officer for the System, I’d like to offer my perspective on the criticisms we’ve been hearing about the program (largely from pharma companies and organizations representing the pharmaceutical industry), along with a first-hand glimpse of how I’ve seen this program save patient lives.

On November 1, 2017, the Centers for Medicare and Medicaid Services (CMS) finalized a ruling that slashes reimbursement rates on drugs that qualify under the 340B program from the current six percent above the sale price to 22.5 percent less than the sale price—a move that is estimated to save pharmaceutical manufacturers $1.6 billion annually. The ruling went into effect January 1.

The program’s critics claim that hospitals are using the savings from the 340B program to line their own pockets or to create centers and programs that will increase hospital profit margins, and that the underserved patients are not receiving the benefits the program was intended to provide. Those of us who are on the front lines of care know a very different reality.

Rather than recap statements about the importance of the 340B program to provide vulnerable patient populations access to life-saving care, including bipartisan endorsements from members of both the Senate and the House of Representatives, as well as from organizations such as The American Hospital Association, I thought the point might be made more clearly with a real story, about a real patient, who may not have survived had Henry Ford not been part of the 340B program. Following is an excerpt of a letter from Igor I. Rybkin, MD, PhD, senior staff oncologist at Henry Ford Cancer Institute.

“I would like to greatly thank Pharmacy Advantage Specialty Pharmacy and the administration of Henry Ford Ambulatory Pharmacy for their generosity in providing Osimertinib oral tyrosine kinase inhibitor at no cost for my patient … [The patient] has a very complex case of stage four [lung cancer] … Due to dangerously low platelet count, chemotherapy could not be initiated. Hence, there were no good options except for oral tyrosine kinase inhibitor. Because of [the patient’s] rare type of … gene mutation, his insurance would most definitely require a prolonged approval process; therefore significantly delaying the initiation of vital therapy. It was a Friday, and time was of the essence when I reached out to … Pharmacy Advantage to inquire on their assistance with this patient. In almost no time at all, Pharmacy Advantage graciously offered to cover the cost of the first cycle of [the patient’s] Osimertinib. Most amazing to me, the medication was delivered to the patient the next day, Saturday, upon which [he] immediately started therapy … Thank you again for helping my patient to get the oral chemotherapy that he needed.”

I could recount hundreds of stories like this one over my career at Henry Ford, not to mention the over 2,050 patients we currently cover with our charity care program. These patients receive all their prescription medications at no cost to them. The System has served as a safety-net hospital since 1915 helping some of the most vulnerable patients I’ve ever encountered. The 340B program is our lifeline. Our margins are negligible and any restriction on the 340B discount program will result in our having to close pharmacies and reduce the life-saving assistance we provide to our patients and the community. I am not exaggerating when I say, lives will be lost.

While the 340B discounts offset less than 50% of our uncompensated care costs, they enable us to provide charity care and other forms of uncompensated care for those most in need — and in so many more ways than just offering medications at reduced (or no) cost, including:

  • Embedding pharmacists in primary care and specialty clinics in Detroit to optimize treatment of chronic diseases.
  • Providing additional services for all patients including the meds to beds program, home delivery and courier services.
  • Helping to cover bad debt (uncollected patient payments) from patients who cannot afford to pay for the full cost of care.
  • Helping to fund the Community Health and Social Services (CHASS) Clinic, which provides free primary care services to about 1,300 uninsured and underinsured Detroit residents every month.
  • Operating school-based and community health programs in 11 child and adolescent health centers and two mobile medical units.
  • Providing services to Medicaid and Medicare beneficiaries at less than cost across the system (government health plan provider reimbursement does not cover the full cost of care).

As is obvious from the above, Henry Ford is committed to using every valuable dollar of our 340B savings to help patients and our communities. I cringe when I hear the claim that hospitals use savings for their own benefit and that there is insufficient oversight of this program. We have a team of 10 professionals dedicated to supporting 340B, and the System is in full compliance with the program. In fact, in the past Henry Ford Hospital successfully completed a Health Resource and Services Administration (HRSA) audit, and this year, three manufacturer audits, with no findings.

Unfortunately, pharmaceutical companies are attacking the 340B program to protect their own profit margins. They are perhaps too far removed from the actual delivery of care—having never been face-to-face with a stage-four lung cancer patient who couldn’t afford his medication—to appreciate the big picture.

We at Henry Ford remain dedicated to serving our patients to the best of our ability, and we urge CMS and critics of the program to realize the consequences of the reimbursement cuts and to reverse the ruling immediately. Underserved patients here in Michigan and across the nation depend on the 340B program for life-saving medications and services.


Alexander Mansour, MBA

Henry Ford Health System

Director of Finance and Contracts

340B Compliance Officer

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