340B Drug Pricing Program Ostensibly Improves Cancer Care but Carries Unforeseen Consequences

Kassem Faraj, MD

Since its inception, the 340B Drug Pricing Program has aimed to improve access to affordable medications for patients with cancer and other diseases. Although the program has been largely successful in some areas, there are other aspects of its current iteration that have led to it falling short or causing unintended consequences for patients and health care systems who participate in the program.

“The 340B Drug Pricing Program is a federal program implemented in 1992 that allows participating hospitals to purchase eligible outpatient medications at discounts from manufacturers,” Kassem Faraj, MD, urologic oncology fellow at Michigan Medicine in Ann Arbor, explained in a statement to OncologyLive. “Eligible hospitals serve a disproportionate share of Medicaid and low-income Medicare patients. Participating hospitals can generate significant savings from the program in the setting [where] they are reimbursed positively for these therapies. The goal of the program is for hospitals to use these savings to stretch federal resources and programs as far as possible for patients and their communities.”

In a retrospective study published in Cancer, Faraj and coauthors sought to characterize the impact of the 340B program on the treatment of patients with advanced prostate cancer. They assessed the use of oral specialty drugs for the treatment of patients with prostate cancer as the primary outcome; secondary outcomes included patient monthly out-of-pocket costs and treatment adherence. Investigators used a 20% national sample of patients with Medicare diagnosed with advanced prostate cancer between 2012 and 2019.¹

Findings from the retrospective study demonstrated that patients who were treated at 340B-participating centers (n = 2237) were not significantly more likely to receive an oral specialty drug for prostate cancer compared with those treated at a center that did not participate in the 340B program (n = 1100; OR, 0.94; 95% CI, 0.76-1.16; P = .58). Notably, patients with a higher social vulnerability index (SVI) received oral specialty drugs at a lesser rate; the use of these agents decreased with each 0.1-point increase in SVI (OR, 0.95; 95% CI, 0.93-0.97; P = .038).

Regarding out-of-pocket costs, monthly costs for patients with low-income subsidies were not associated with 340B participation (coefficient, –0.10; 95% CI, –0.22 to 0.07; P = .26). Participation in the 340B program (OR, 1.26; 95% CI, 0.89-1.8; P = .2) and patient SVI (OR, 0.97; 95% CI, 0.89-1.1; P = .46) were both not significantly associated with treatment adherence. However, the interaction between hospital 340B participation and social vulnerability on treatment adherence was statistically significant (P = .02).

“The key findings [from our study] were that the 340B program was not associated with differences in initiating therapy for advanced prostate cancer. However, among those who were started on therapy, 340B was associated with increased treatment adherence in [men with high SVI],” Faraj noted. “The evidence in the literature has mainly assessed the program’s effect on safety net programs. These include the propensity to provide discounted or free medications, care to the uninsured, uncompensated care, and [expansion of] the availability of low-profit services. There are conflicting data on whether the program positively or negatively influences a hospital’s likelihood of investing in these programs.”

Although participation in the 340B program has been shown to increase safety net spending, defined as spending by clinics and hospitals that serve patients who are uninsured, the overall impact of this spending on improving care for patients with cancer is debatable. Nikpay et al conducted an analysis using data from nonprofit and public hospitals that participated in the 340B program in the United States from 2011 to 2015 with the aim of describing the relationship between participation in the programs and hospital safety net spending.²

The study compared new participant hospitals in the program with 3 control groups: all other hospitals, nonparticipants, and not-yet participants. Outcomes included spending on a variety of safety net measures, including charity care, community benefit spending, charity care policies, and low-profit service-line provisions.

Results from the analysis showed that compared with all other hospitals, hospitals that were new participants in the 340B program increased charity care spending by 21.8% (SE, 9.8); this spending increase was 28.9% (SE, 8.8) and 21.3% (SE, 9.8) compared with nonparticipating hospitals and hospitals that had not yet participated, respectively. However, compared with hospitals that had not yet participated, 340B participants displayed decreased spending on cash donations and research by 42.8% (SE, 19.5) and 67.3% (SE, 29.8), respectively. The study authors concluded that although the program potentially offers more patients discounted care via charity care, these gains for patients are fully offset by cutbacks in other key programs that benefit the community.

“There are [also] concerns that participating hospitals may be incentivized to utilize expensive therapies, given that the savings they generate after entering the program can be substantial,” Faraj added. “Some [research] has demonstrated that the program has been associated with increased spending on oncologic drugs, although the implications of these findings on quality are not clear.”

In a cohort study published in JAMA Health Forum, investigators examined data from 95,127 outpatient biologic oncology drug spending instances in 478 hospitals in the US between 2007 and 2019. The study compared spending for commercially insured patients treated at hospitals that were new 340B participants vs those treated at nonparticipating hospitals. Data were included from patients who received any of the 5 drugs of interest: filgrastim (Neupogen), pegfilgrastim (Neulasta), trastuzumab (Herceptin), bevacizumab (Avastin), and rituximab (Rituxan).³

Commercially insured patients treated at 340B-participating hospitals experienced increased amounts paid for oncologic treatment episodes vs those treated at nonparticipating hospitals. Costs for these patients rose by $5132.37 (95% CI, $1656.82-$8607.92; P = .004), $4625.08 (95% CI, $1239.56-$8010.60; P = .007), and $6504.18 (95% CI, $2829.79-$10,178.56; P = .001) in years 1, 2, and 3 of participation. Notably, there was no significant differential trend in episode spending when 340B-participating and nonparticipating hospitals treated patients with Medicare Advantage.

Further research conducted by the North Carolina State Health Plan for Teachers and State Employees revealed that many hospitals in the state used the 340B program to overcharge patients with cancer for oncologic drugs. Some hospitals that participated in the program chased higher profits by expanding into more affluent neighborhoods with higher rates of insurance and greatly increasing the number of contracts with external pharmacies, they said. The study authors noted that although the program theoretically allows for participating hospitals to share the savings they experience with patients or reinvest these savings in other areas to benefit the community, there is no legal requirement that they do so.⁴

Findings from an analysis of medical claims by the North Carolina State Health Plan for Teachers and State Employees showed that 340B hospitals in the state charged an average price markup of 5.4 times the discounted acquisition costs for outpatient oncologic infusion drugs compared with 2.9 times the US commercial price at non-340B hospitals. Additionally, 340B hospitals billed the North Carolina State Health Plan at a higher price markup of 84.8% vs nonparticipating hospitals from 2020 to 2022. Some 340B hospitals averaged up to $6026 in profit per claim and charged as much as 12.7 times the acquisition cost for oncology drugs; 15 of the 21 hospitals that filed over 300 claims related to treating state employees with cancer charged at least triple the acquisition cost.

“Future research should assess the implications of the program on the quality of care being delivered to patients. Many hospital advocates and hospitals themselves report that 340B savings are being used to improve various aspects of patient care,” Faraj said. “The goals of the program are vague and open to interpretation, which in turn has made it challenging to assess the program’s effectiveness. As an initial step to improve the program, reform could focus on providing guidance on how hospitals can use savings from discounted medications. This would allow governing bodies to establish objective measures to assess the program’s effectiveness.”

References

1. Faraj KS, Kaufman SR, Oerline M, et al. The 340B program and oral specialty drugs for advanced prostate cancer. Cancer. 2024;130(12):2160-2168. doi:10.1002/cncr.35262
2. Nikpay SS, Buntin MB, Conti RM. Relationship between initiation of 340B participation and hospital safety-net engagement. Health Serv Res. 2020;55(2):157-169. doi:10.1111/1475-6773.13278
3. Chang J, Karaca-Mandic P, Nikpay S, Jeffery MM. Association between new 340B program participation and commercial insurance spending on outpatient biologic oncology drugs. JAMA Health Forum. 2023;4(6):e231485. doi:10.1001/jamahealthforum.2023.1485
4. Overcharged: State Employees, Cancer Drugs, and the 340B Drug Pricing Program. North Carolina State Health Plan. Accessed May 31, 2024. https://www.shpnc.org/documents/overcharged-state-employees-cancer-drugs-and-340b-drug-price-program/download?attachment