340B Health Says Changing Hospital Eligibility Will Slash Program

A day before legislators will hold hearings on 15 bills relating to the 340B drug discount program for hospitals, 340B Health, which represents those hospitals and providers, released a report that says more than half of the disproportionate share hospitals (DSHs) would lose eligibility under one Congressional proposal.

The analysis by 340B Health shows that 573 of the 1115 DSHs currently in the program would be dropped from 340B and no longer eligible for drug price discounts.

Hospitals that would lose 340B eligibility under the proposal provided $10.8 billion in uncompensated and unreimbursed care in 2016, 340B Health said. To be eligible to participate in the 340B program, DSHs must provide a high level of care to Medicaid and low-income Medicare patients.

The impact of the proposed policy change would be felt in 47 states, the District of Columbia, and Puerto Rico.

In 5 states—Idaho, North Dakota, South Dakota, Utah, and Vermont—all of the DSHs currently participating in 340B would lose eligibility.

The largest number of hospitals lost would be in California (39), Texas (35), North Carolina (33), Georgia (31), and Ohio (29).

Only Alaska would not lose any DSH participants. New Hampshire and Wyoming do not currently have any DSHs, 340B Health said.

The 340B drug discount program requires drug manufacturers to sell their products at a discount to qualifying hospitals, clinics, and health centers. 340B Health said that hospitals use those savings to extend services to low-income patients.

Under the current requirements, DSHs become eligible if their Medicare DSH adjustment percentage is greater than 11.75. The proposal by Congressman Joe Barton, R-Texas, would raise the minimum DSH adjustment percentage that DSHs must meet to qualify for the 340B program to 18%, a hike of more than 50%.

The House Energy and Commerce Health Subcommittee is scheduled to discuss Barton’s proposal, along with 14 other bills, during a hearing scheduled for Wednesday morning, July 11.

“This proposal would decimate the 340B drug pricing program and leave millions of low-income Americans with higher costs and less access to care,” said Maureen Testoni, interim president and chief executive officer of 340B Health, which represents more than 1300 hospitals and health systems. “Such a drastic change would put enormous pressure on safety net hospitals, clinics, and health centers.”

“This kind of radical change to the 340B program will not help patients and will not lower the price of drugs. Instead, it will transfer billions of dollars from safety net hospitals to pharmaceutical companies,” Testoni added.

On Monday, HHS Secretary Alex Azar told the 340B Coalition Summer Conference that changes resulting from the Affordable Care Act have created a system whereby there is no way to tell if the discounts given to hospitals and providers are still benefitting the patients they were meant to, due to a lack of transparency. In some cases, he claimed, patients pay more in cost sharing than the hospital or provider pays for the drug covered under 340B.

340B Health said losing access to 340B savings would make it more difficult for these hospitals to continue providing care to low-income patients.

Azar was at the meeting to talk about drug prices. The analysis from 340B Health said their data shows that 340B discounts represent less than 2% of the total US drug market and cannot be a driver of increasing pharmaceutical list prices.