New 340B analysis: Hospitals raking in billions while uncompensated care drops by billions

One of the many flaws with the 340B program is the lack of transparency into how the program operates and whether patients are seeing any benefits. Last week, Drug Channels was able to shine a little light onto the 340B program, looking at 340B sales data from HRSA and contrasting that data against data from the American Hospital Association. Here at two key takeaways:

• Total 340B Sales in 2017: According to HRSA, brand and generic medicine sales at the discounted 340B price accounted for $19.3 billion in 2017. That’s a significant increase over 2016 sales of $16.2 billion.

• Hospitals’ Uncompensated Care in 2016: Drug Channels took a look at self-reported data from the American Hospital Association, an organization with many members that are 340B DSH hospitals, and found hospitals’ uncompensated care rate decreased by almost $8 billion between 2012 and 2016.

The 340B program has grown and grown, with hospitals bringing in more and more 340B revenue. Yet charity care rates and uncompensated care rates have all declined over that same period of time. As Drug Channels explains, “Nearly all of the billions in 340B discounts have accrued to hospitals. Yet hospitals’ charity care has dropped by almost $8 billion amid the 340B program’s astounding growth.” For a program that was created to help safety-net entities provide care to uninsured or vulnerable patients, there doesn’t appear to be a lot of evidence that patients are actually benefiting.

These data highlighted by Drug Channels are the only data we have access to that provide insight into the size of the program. Data on the direct sales that go from manufacturers to 340B entities have not been made public. HRSA’s reported data only represent sales made through its vendor Apexus and excludes these direct sales. MedPAC estimates direct sales represent 5 to 10 percent of program sales, and those sales are missing from that $19.3 billion number based on Apexus data. Heading into today’s Senate Health, Education, Labor and Pensions Committee hearing on the 340B program, one question that must be asked is how we can ensure the timely release of data about the 340B program.

Stakeholders from across the health care sector have agreed that 340B has gone off track and isn’t always being used by hospitals to help vulnerable or uninsured patients. We need to fix this program that is a critical piece of our nation’s safety net, and a key step is providing more oversight and accountability. Legislation introduced in the House and Senate take this first step. That’s why Congress should pass the 340B PAUSE Act and HELP ACT.

Learn more at PhRMA.org/340B.