Last week a federal judge dismissed a move to block the 340B rule cuts. While ongoing legal challenges are more than likely, this is good news for those of you who do IVIG therapy in your offices and for your patients.
In the early ‘90s, Congress created 340B – a special drug purchasing program that required pharmaceutical companies to sell drugs at significant discounts to certain hospitals and clinics serving large portions of low-income patients. The idea behind the program was that these safety net hospitals and clinics could take the money they were saving by getting drugs at a lower cost and use that money to improve care for their low-income patients. The program proved to be very successful for patients and the hospitals and clinics that qualified for this program.
About 10 years ago, the types of hospitals and clinics that could qualify for 340B pricing began to expand. Some independent program reviews showed that what some hospitals were being paid by Medicare and other third-party payers for these 340B drugs was well in excess of the cost of the drugs, and it was unclear what was happening to these “profits”.
On November 1, 2017, the Centers for Medicare and Medicaid Services (CMS) released a final rule implementing a payment reduction for 340B covered outpatient drugs billed to Medicare by most 340B eligible hospitals. Specifically, effective for drugs purchased on or after January 1, 2018, Medicare will no longer pay Average Sales Price (ASP) plus 6 percent and instead, Medicare will pay ASP MINUS 22.5 percent. In the final rule CMS also announced that rural Sole Community Hospitals (SCHs), Children’s Hospitals, and PPS-exempt cancer hospitals would not be affected by the payment reduction. They would continue to be paid ASP plus six percent.
A number of physicians, including some allergy/immunology physicians, have expressed concern about the 340B program noting that it creates a disadvantage for patients that receive certain types of care – such as IVIG therapy – at a safety net hospital/clinic rather than in the allergists office. The cost to the patient for IVIG therapy in an allergists office could be significantly higher than the cost to the patient for that same care when provided in a 340B eligible institution.
In addition to CMS, Congress isn’t turning a blind eye to this issue either. There were several Congressional oversight hearings to try to assess the magnitude of any problems with the 340B program. While the 340B program continues to enjoy strong bi-partisan support – particularly from Congressional members representing rural states and districts – the revelation that some hospitals and centers might not be following the spirit of the law, let alone the letter of the law, was disconcerting to many elected officials.
Several members of Congress have indicated they intend to introduce 340B reform legislation in the near future. The ACAAI Advocacy Council will continue to track these developments and consider appropriate action based upon what it believes would be in the best interest of you and your patients.