Misleading meltdown: Hospitals are using scare tactics to attempt to block the Health Resources and Services Administration’s (HRSA) commonsense 340B rebate model pilot, which simply asks for basic data to help make sure certain key legal requirements are met for ten medicines before receiving the 340B price through a rebate. Rebate models are a standard practice typically used in other important federal drug programs and the commercial market.
Big hospitals have long exploited 340B to line their pockets. In fact, new data from the CBO directly refutes the misleading rhetoric from big hospitals and shows that hospital actions are driving up costs for taxpayers.
Get the facts: Using a biased survey based on worst-case assumptions and self-reported data from only 13% of 340B hospitals, the hospital industry is stoking fears, spreading misinformation, and painting a doomsday scenario. These are the same tired scare tactics hospitals use when policymakers pursue reforms that prioritize patients over hospital profits.
Here’s the truth to the misleading claims the big hospital lobby is trying to make.
- MYTH: Rebate models are administratively burdensome.
FACT: Hospitals should already maintain auditable records and data required for rebate processing as part of standard practice. Any notion that the rebate model is a burden to hospitals and clinics doesn't match how these entities already operate. - MYTH: Hospitals will have to “float millions” and face financial ruin.
FACT: Hospitals won’t be required to float significant amounts of money. The HRSA rebate notice requires that manufacturers pay 340B claims within 10 days, which means that in most cases hospitals will receive rebates before they have to pay their wholesalers. - MYTH: The rebate model threatens rural hospitals.
FACT: The rebate model does not make changes to rural hospital eligibility for the 340B program and requires manufacturers to pay 340B rebates within ten days—ensuring that hospitals can be reimbursed before most wholesaler invoices are due.
Concerns raised about rural hospitals are a diversion tactic by big city hospitals that are trying to distract from the fact that many of them are currently masquerading as "rural" providers—abusing loopholes in the 340B program and in Medicare to qualify for federal resources meant to support rural communities and cashing in on discounted medicines intended for providers treating underserved patients.
What’s really in the big hospital’s wallet:
- Big, tax-exempt hospitals and their for-profit partners rake in nearly $65 billion a year from 340B, no strings attached.
- Studies show that the 340B program doesn’t boost uncompensated care, with some DSH hospitals providing 24% less in the five years after joining the program.
- Some 340B hospitals even spend on luxury perks while collecting patient debt.
- Zoom in: Stadium naming rights, movie studios, Michelin-star chefs and even a location in London.
We can expect more of the same, tired scare tactics as Congress and the administration scrutinize 340B and advance needed reforms.
The fix: Lawmakers and the administration shouldn’t fall for it this time either and should instead support the rebate model pilot, which is an efficient, private sector solution to ensuring the 340B program meets key basic program rules.
Learn more at PhRMA.org/340B and download our complete myth/fact resource on the rebate model pilot program.
Molly Jenkins
Molly Jenkins is a senior director of Public Affairs at PhRMA, where she leads communications on the 340B hospital markup program. Before joining PhRMA, she led issue advocacy and reputation campaigns at Purple Strategies. She also worked on Capitol Hill in serval different capacities, including leading communications for Rep. Greg Walden and as press secretary for the Energy and Commerce Committee. Molly has an M.A. in Health Communication and Media Relations from Johns Hopkins University and a B.A. in journalism from Texas Christian University.
Molly Jenkins