As an increasing number of pharma manufacturers enact new restrictions on 340B drug discounts, hospitals participating in the program have now more than doubled the annual loss projections they gave at the tail-end of 2021, industry group 340B Health writes in a new report.
During a December 2021 survey when eight drugmakers had announced restrictions, critical access hospitals said they were losing a median $220,000 per hospital in contract pharmacy savings. Larger participants, such as disproportionate share hospitals, sole community hospitals and rural referral centers, estimated at the time their median annual losses were $1 million per facility.
In a new survey (PDF) of 482 340B hospitals with contract pharmacy relationships conducted in March—when 14 major drug manufacturers had announced restrictions—critical access hospitals upped their estimated annual losses to a median $448,000 per year, according to the advocacy organization representing these providers. For the larger facilities, the estimated annual losses jumped to a median $2.2 million per facility, the group wrote.
Although opposed by the Department of Health and Human Services, these restrictions have increased in recent months as the back-and-forth legal battle between drugmakers and the Biden administration plays out in courts.
340B Health noted that two more major drug companies, Johnson & Johnson and Gilead, have announced 340B restrictions since the time of polling for its most recent report.
According to the report, three-quarters of responding hospitals said the restrictions on discounted drugs through community and specialty pharmacies are delaying patients’ access to needed drugs. Further, 69% said the restrictions are leading to higher bills and financial hardships, 50% said they made patients either stop taking a drug or switch to a less effective alternative and 41% said they’ve led to worse health outcomes.
As for the hospitals themselves, 80% said they anticipated cutting some patient care services should drugmakers’ 340B discount restrictions become permanent. Fifty percent said permanent restrictions would likely lead to staff layoffs, and 21% said their hospital could be at risk of closure.
“These drug companies are draining vital resources from the health care safety net by blocking hospitals’ access to 340B discounts through community and specialty pharmacy partners,” 340B Health president and CEO Maureen Testoni said in a statement accompanying the report. “By focusing their unlawful policies on some of the costliest specialty drugs on the market, these companies are pocketing 340B savings for themselves and circumventing penalties Congress included in 340B to inhibit massive drug price hikes.”
While the hospital industry and the federal government say 340B-covered entities can’t do without the program’s discounts, opponents of the program say hospitals are capturing the discounts for themselves and not passing along their savings to patients and payers.
One report from last September that focused on oncology drugs found a sample of safety net hospitals charging payers a median 3.8 times more than the purchase price for 59 oncology treatments and supportive drugs. A more recent analysis described the 340B drug discount program as a bloated and “increasingly dysfunctional” initiative.