Bringing a Runaway Government Program to Heel

OncLive Chairman,

Mike Hennessy

The 340B drug discount program is bigger than any Jurassic Park monster that ever broke out of its cage, and arguably bigger than any California wildfire that ever burned up the Sierras. Now, some revisions that could make a sizeable dent in the runaway spending are in store for this multi-billion dollar government program.

As the federal government continues to accept comment on draft revisions through the end of October, the Community Oncology Alliance has weighed in with a report on the explosive growth of the 340B program. Payers, drug manufacturers, and independent oncology practices all have been at the losing end of this deal that allows 340B certified institutions to reap full payment for drugs that they obtain at a deep discount.

Previous measures of the growth of 340B have fallen short of the true mark, says the new report by Berkeley Research Group and commissioned by the Community Oncology Alliance (COA). For example, the report indicates that from 2010 to 2013, Medicare Part B cancer drug spending rose 123% in 340B hospitals, climbed 31% in non-340B hospitals, and dropped 5% in community practices.

In the October issue of Oncology Business Management, we report that COA sees something positive in that trend: drug spending is stable at community oncology practices where the transition to value-based care is well under way.

We also show that some who have eyeballed the voluminous, 90-page revision document find that the problem of contract pharmacy proliferation has not been addressed.

Pharmacy arrangements make 340B discounts available over a wider territory than hospitals can manage alone, but they often do it in areas where people are generally affluent and there is no justification for the application of 340B discounts.

“We think it’s a real challenge to the long-term sustainability of the 340B program and a very serious part of why the program isn’t working as it was intended to,” Stephanie Silverman, spokeswoman for the reform group AIR340B, told Oncology Business Management. According to the Berkeley report, there are over 3000 retail pharmacies and mail order/specialty pharmacies contracting with 340B entities this year, up from less than 1000 just five years ago. Did anybody ever see a charity program grow that fast and sustain such momentum based on the spirit of giving alone?

In the October issue, Oncology Business Management also looks at the walkaway patient—the patient who shows up for care but doesn’t continue, or who gets to the pharmacy counter and undergoes sticker shock when it comes time to hand over the credit card or some hard cash. These patients need and deserve care just like anyone else, though often they require special assistance to bridge the gap between their resources and the soaring cost of medicine.

In another feature we examine the status of drug shortages. These gained a high profile in late 2010 and 2011, partly owing to a production shutdown at Teva’s Irvine, California plant, where dozens of drugs are produced. New shortages have declined significantly since then, though they remain a concern for oncologists and, in particular, pediatric oncologists.

With production lines running at full steam and manufacturers turning to the most profitable drugs, there’s nothing to ensure that older standbys, still highly valuable in oncologic treatment, will be produced. “What most worries me is that some of the key drugs will just disappear,” Susan Weiner, founder of Children’s Cause for Cancer Advocacy, told Oncology Business Management.

There’s more in this issue, including a story about efforts to improve interoperability of health record technology. Getting computers to communicate essential health information across platforms remains an issue even in 2015, but there’s a related problem in the form of “information blocking,” where key information is deliberately dammed up by companies hoping to extract a fee for usage.

It gets “curiouser and curiouser,” and it’s all in the October issue of Oncology Business Management.