Critics of discount prescription program call for transparency, accountability

FRANKLIN — A federal program makes some prescriptions available to patients at lower costs through their local hospital, but critics are calling for increased transparency around where the money saved is spent. 

The 340B Drug Pricing Program, active at Concord Hospital-Franklin, was created to assist healthcare providers serving low-income and vulnerable patients, helping to stretch limited resources by reducing costs of certain prescriptions.

This program was first established by Congress in 1992. Participating hospitals and other health centers purchase outpatient medications at a discounted rate, allowing leaders to pass those savings along to patients.

Although the program is active at many hospitals, all qualifying centers nationwide are able to take advantage. Leadership can use the savings to put money into services that are lacking.

“Underfunded services typically are mental health services, substance use disorder treatment, labor and delivery, pediatric specialties or rural health clinics, or community outreach programs,” said Kathy Bizarro-Thunberg, executive vice president, federal relations for the NH Hospital Association. “Those typically are not funded, or underfunded. And so, the hospitals having cost savings on drugs are able to use some of those extra dollars towards supporting and preserving those services.”

Bizarro-Thunberg said, especially in rural New Hampshire, the program has been “instrumental” in helping health centers serve their communities 24/7.

The Alliance for Integrity and Reform of 340B, made up of patient advocacy groups, clinical care providers, and biopharmaceutical innovators, is rallying for changes. Khadija Butt, spokesperson for the alliance, said the group is aiming for transparency and accountability for the program.

“We've now seen the program kind of go off track, and a lot of hospitals and clinics that are part of the program are starting to kind of pocket the discounts that were intended for patients, and drive up their own bottom lines instead,” Butt said.

AIR340B members claim the program increases costs for taxpayers, especially when public healthcare programs, such as Medicaid, are not receiving discounts, according to Butt.

Butt also referenced a poll from the National Consumer’s League, stating 4 out of 5 Granite Staters “support reforms to end 340B Program abuses.”

The advocacy group would like to see new legislation proposed in Congress, requiring stricter transparency. Butt said they have also looked into a new rebate model.

“Instead of providing discounts upfront to different hospitals and clinics, it would have a rebate-focused model, which a lot of other federal programs do as well,” Butt said. “And so, having the rebate, rather than the upfront discount, will just help get the program back on track, in terms of understanding how the discounts are being used, and more awareness about how it's flowing through the program.”

Butt said they have seen foregone rebates from the program actually reduce both local and state tax revenue by $2.3 million. AIR340B members aim to ensure other healthcare programs are not losing funding because of 340B, and lost savings.

Bizarro-Thunberg said the NH Hospital Association members think the program is already showing transparency. They are against House Bill 1755, which proposes a requirement for all providers to submit an annual 340B data report to the state, and think the bill duplicates actions already occurring.

“Federal accountability is already robust. And it includes annual recertifications to determine 340B eligibility, because sometimes things can change, and an organization has to annually re-certify that they still qualify as 340B,” Bizarro-Thunberg said. “There's also compliance with federal regulations that prevent duplication of discounts or rebates, and it also has a lot of auditing that checks for any adverse findings. And if there are any adverse findings, those are posted publicly online.”

“The reality for Concord Hospital Health System today is that we see relatively little financial benefit from the program. Restrictions imposed by pharmaceutical manufacturers over the past several years have significantly reduced the savings available to us, and 340B does not subsidize the community health programs and services we provide,” said Regina Martin, administrative director of operations for the pharmacy at Concord Hospital-Franklin.

Bizarro-Thunberg said the NH Health Association supports extending 340B benefits to contract pharmacies, because it brings the discounts to locations where patients need it, and where they often fill their prescription medications.

“It's part of the expectation that drug manufacturers should recognize those purchases to contribute to the healthcare safety net.

"340B is a healthcare safety net program,” Bizarro-Thunberg said. “So, drug manufacturers have actually tried to deny 340B benefits for purchases from contract pharmacies, because they don't want to pay their fair share.”

Butt said AIR340B members have seen markups multiple times higher than what the hospital paid for the drug.

“Those markups then turn into higher out-of-pocket costs for patients at the pharmacy counter, whether that's through patients with Medicare, or patients with commercial insurance,” Butt said.

NH Health Association and AIR340B both want to see 340B used for its intended purpose: to help vulnerable patients receive adequate care through discounted medication costs, and see those cost savings go back into the hospitals and health centers.

“For us, 340B is one potential tool, but it is not a solution to the larger financial pressures facing rural healthcare,” Martin said. “Regardless of the benefit we receive from the program, our focus remains on preserving access and providing safe, equitable and compassionate care to the communities that depend on us."