ASCO Issues Recommendations on How to Fix the 340B Drug Pricing Program

Lilly Ostrovsky, MS

August 2014, Vol 5, No 6 - Pricing

In April, the American Society of Clinical Oncology (ASCO) released a policy statement recommending how to fix the 340B Drug Pricing Program (ASCO. J Oncol Pract. 2014;10:259-263).

Established in 1992, the 340B Drug Pricing Program was intended to provide resources and incentives for uninsured, underinsured, and low-income patients. Under the 340B program, manufacturers must provide substantial discounts for the sales of covered drugs to covered entities as a prerequisite to qualifying for Medicaid reimbursement.

Covered entities are defined as those that provide high levels of uncompensated or undercompensated care. This program is particularly important in oncology, considering the high cost of cancer drugs.

Since its enactment, policymakers have questioned whether the 340B program is accomplishing its goals to benefit vulnerable patient populations. The ASCO committee identified factors that may be hindering the program, including its rapid growth, insufficient oversight and regulation, and inattention to the effects on outpatient oncology care.

Compliance Issues
Over the past decade, the number of 340B covered entities has approximately doubled. The disproportionate share hospital adjustment percentage defines eligibility for the program by inpatient services rather than by outpatient drug prescriptions. Consequently, concern is mounting that the growth of the program does not accurately reflect the proportion of prescription drugs used to help low-income or vulnerable patient populations.

Inadequate compliance with the 340B program is another concern, and current “oversight standards make it particularly susceptible to confusion, misinterpretation, and abuse.” ASCO members noted that existing regulatory definitions are unclear––contributing to the lack of compliance and preventing meaningful oversight.

For example, the program defines eligible individuals as “patients” based only on whether they are treated by a covered entity and not on whether they are uninsured or underinsured. This ambiguity may lead some covered entities to divert discounted prescription drugs away from unqualified patients.

Another concern is whether cancer care merits special attention by policymakers. For example, because outpatient oncology practices do not qualify as stand-alone entities for the 340B program, many hospitals acquire practices to allow more patients access to 340B cancer drugs. This can lead to reimbursement problems and increased out-of-pocket costs for patients.

“Our concern became that 340B was tilting the balance such that it made it very difficult, especially in some communities, for patients to be able to go to community oncologists, and were being in some ways forced into the hospital system,” Blase N. Polite, MD, MPP, Chair of ASCO’s Government Relations Committee and member of the ASCO 340B Workgroup, told Value-Based Cancer Care (VBCC).

“To use discount purchase agreements to increase the profitability of chemotherapy infusions on well-insured patients is an unjustified corruption of the program’s intent. As a community oncologist, I applaud ASCO’s important work on providing equity for all of our patients,” said Kevin B. Knopf, MD, MPH, California Pacific Medical Center Sutter Health, San Francisco, and VBCC editorial board member.

ASCO’s Recommendations to Fixing the Program
Improve transparency. Congress, Health Resources and Services Administration (HRSA), and other policymakers should mandate each eligible entity to report on its 340B savings and the percentage of savings reinvested into the care of low-income and vulnerable patients annually.

Adopt safeguards. To accommodate the changing demographics of oncology care and to evade some of the adverse consequences of the growth of the program, Congress should replace the use of inpatient data to determine eligibility with a formula that considers the percentage of underinsured and uninsured patients treated in the outpatient setting.

“This will improve the accountability for the program and address concerns that some entities could profit from the 340B Drug Pricing Program without a commitment to providing outpatient drugs to vulnerable populations,” the authors noted.

Clarify definitions and fund oversights. Congress and HRSA should define and clarify the term “patient” to be consistent with the program’s overarching principle, stating that such efforts would “promote the goals of the program and permit meaningful oversight.” Furthermore, HRSA should be sufficiently funded and staffed to properly conduct oversight activities.

Understand and respond to adverse impacts of the program. In light of the expansion of the 340B program, policymakers are urged to focus on understanding and responding to intended and unintended impacts of the program, including patient access to care through the availability of community-based physician oncology practices. Policymakers need to be aware that community-based physician oncology practices increase patient access and choice, and the adverse consequenc­es of their potential termination or acquisition.