Hospitals classified as 340B institutions are playing an increasingly large role in oncology care, and the rapid growth in the federal 340B program has resulted in big changes in the oncology drug marketplace, according to a recent white paper released by the Community Oncology Alliance.
Hospitals classified as 340B institutions are playing an increasingly large role in oncology care, and the rapid growth in the federal 340B program has resulted in big changes in the oncology drug marketplace, according to a recent white paper released by the Community Oncology Alliance (COA): The Oncology Drug Marketplace: Trends in Discounting and Site of Care, by Aaron Vandervelde and Eleanor Blalock of the Berkeley Research Group LLC.
The report found that the move from the physician’s office to the hospital outpatient setting as the site for oncology care has continued unabated since 2008, with 340B hospitals now playing “an outsized role” in this shift in site of care. “Fueled by profits on oncology drugs purchased at a 340B price, 340B hospitals are expanding oncology services while at the same time increasing costs for patients and payers,” the report concludes, and recent trends indicate no slowdown of program growth will occur in the near future. The average profit margin on oncology drugs purchased by 340B hospitals has grown to 49% in 2015, creating a huge financial incentive for 340B hospitals to expand oncology services and administer higher volumes of cancer drugs purchased at 340B prices.
The 340B Drug Discount Program requires drug manufacturers to provide outpatient drugs to eligible healthcare organizations and covered entities at significantly reduced prices. Six categories of hospitals are eligible to participate in the 340B program, 1 of which is cancer hospitals that are exempt from the Medicare prospective payment system.
The analysis is based on Medicare fee-for-service claims (2008 to 2016) and a combination of IMS wholesale acquisition cost sales data and publicly available pricing data (2010 to 1015) to conduct financial analysis of sales, discounts, rebates, and 340B margins on a subset of separately payable oncology drugs that accounted for 85% of total Medicare Part B oncology drug reimbursement in 2015.
Among their findings:
“Absent additional legislative and/or regulatory action, we believe the trends identified in this study will not only continue but potentially accelerate in the coming years,” the authors assert. The continued shift of oncology care to the hospital outpatient setting, combined with increased rates of cancer and rising drug prices, is setting the stage for higher overall costs of oncology care, they conclude.
“340B should be an important safety net for patients in need but it has mutated into a nightmare of increasing costs for seniors, adversely impacting cancer care, and fueling drug prices,” said Ted Okon, executive director of COA. He applauds efforts by US House of Representatives Energy and Commerce Committee to reassess the 340B program, and CMS for taking steps to address abuses. “Congress must legislate program transparency and accountability to ensure that 340B savings help patients in need.”