The 340B program has gained a lot of attention in the news recently and has been widely scrutinized. The College’s Advocacy Council wants to ensure that allergists understand the program and how it can impact their practices.
340B and allergy practices
Most allergists work in a physician office setting and are ineligible for 340B discounts. An allergy practice that operates as part of a larger health care organization that qualifies as a covered entity may be able to access 340B discounts for eligible drugs purchased and used within the scope of the larger covered entity’s health care operations. However, assessing if an organization qualifies as a 340B covered entity must be done on a case-by-case basis.
Additionally, contract pharmacies often proactively contact 340B-eligible facilities to market their services, sometimes even to allergy practices. Contract pharmacies can provide pharmacy services for 340B-covered products on the facility’s behalf. Some of these pharmacies contact practices that might not be eligible for 340B, which can cause confusion. Allergy practices should consult with a reputable health care attorney before reaching an agreement with a 340B contract pharmacy.
Even though most allergists do not participate in the 340B program, it is important to remain knowledgeable of how the program is impacting health care costs.
When the 340B drug discount program was established, its intended goal was to help certain health care facilities that serve vulnerable patient populations remain profitable by guaranteeing them discounted prices on certain prescription medications.
Many believe the program has steered away from this mission and its positive outcomes.
The 340B program was originally created in 1992 as section 340B of the Public Health Service Act. The program is overseen by Health Resources and Services Administration (HRSA) and mandates that drug manufacturers provide discounts on outpatient drugs to specific health care organizations known as covered entities. The types of health care facilities that can be covered entities include certain hospitals (such as disproportionate share hospitals, critical access hospitals, and children’s hospitals), Ryan White HIV/AIDS Program grantees, and other safety net providers serving vulnerable populations.
Through the 340B program, covered entities can purchase outpatient drugs from participating manufacturers at significantly reduced prices. Enrolled covered entities can save 25-50% on outpatient drug purchases. Cancer drugs are typically the most common products (by aggregate spending) in the 340B program, but many allergy and asthma products are also discounted.
Most physician practices are not eligible to participate in the program as a covered entity.
However, the 340B program has recently been the subject of scrutiny in Congress, with allegations that hospitals have taken advantage of the program with minimal oversight. There are no statutory or regulatory guardrails to ensure that the 340B grants are being spent by hospitals in the way that the program intended. For example, savings from 340B discounts can be spent on any number of expenses, including raises for hospital executives or hospital renovations. This is not to say that these abuses are common. However, there seems to be interest from some members of Congress to add limits and transparency for how covered entities use their 340B discounts.
Furthermore, the program has expanded far beyond the original intent of helping safety net hospitals provide care for patients. The bar to participate in the program is relatively low. Currently, more than 50% of nonprofit hospitals participate in the 340B program. This has resulted in concerns that the program is inflating health care costs for taxpayers, patients, and employers.
The Advocacy Council will monitor this program and advise its members of any changes affecting allergy.
The Advocacy Council – ADVOCATING FOR ALLERGISTS AND THEIR PATIENTS.
