By Amy Cook, JD, Jonathan Larsen, JD, MPP, and Sabrina Ruchelli, JD
Section 340B of the Public Health Service Act requires that pharmaceutical manufacturers give discounts on specified outpatient drugs to certain covered entities who typically serve low-income or otherwise underserved patients, including hospitals and clinics.
However, according to the Government Accountability Office (GAO), there are no measures built into the program to assure that 340B program discounts are being used to support care for low-income populations, let alone to improve access to medicines discounted through the program.
Meanwhile, hospital care spending is increasing, driven by price increases for things like procedures and emergency care. By 2030, CMS projects that spending on hospital care will grow an additional $2.24 billion, reaching $6.3 billion and accounting for a third of U.S. health care spending. According to the Health Cost Institute, from 2016 to 2020, overall inpatient hospital spending increased 5.4%, driven by a 24.6% increase in hospital prices and offset by a 15.4% decline in inpatient utilization (partially reflecting the sharp 2020 drop in overall hospital utilization due to COVID-19). This steady increase in prices can leave patients unable to pay their medical bills or access necessary medical care. One-fourth of US adults say they or a household member have had problems paying medical bills, according to the Kaiser Family Foundation.
One way to gain insight into the types of financial support provided for low-income patients is to examine financial assistance policies at hospitals participating in the 340B program. New research from the Center for Public Health Law Research funded by the Pharmaceutical Research and Manufacturers of America (PhRMA), used policy surveillance to examine financial assistance and related debt collection policies from 75 of the largest 340B hospitals in the country (51 largest 340B hospitals by revenue in each state and the District of Columbia along with the 24 next largest 340B hospitals by revenue for the 2017-2018 or 2018-2019 fiscal years).
The study found that among the sample of 340B hospitals, only 13 clearly indicate how they provide pharmaceutical assistance to patients or how patients may access discounts on needed medicines.
For seven hospitals, charity care (care provided at no cost to the patient) was limited to those at or below 100% of federal poverty guidelines. On the other end of the spectrum, two hospitals’ charity care policies provide free care for patients up to 600% of federal poverty guidelines. However, these policies apply to medical services received by eligible patients and may or may not include cost sharing associated with prescription medicines.
Of the 64 hospitals that included debt collection actions in their policies, just six specifically prohibited the use of extraordinary collections actions, which can include liens, foreclosures, and civil actions when patients fail to pay bills. Additionally, less than half of the hospitals in the study detailed their appeals process for responding to a denial of financial assistance.
The broad range of financial assistance policies in place at 340B hospitals suggests limitations in how the 340B program savings are used to help patients struggling to pay for medical treatment, specifically regarding affordability of medicines for low-income populations. With more than 2,500 340B hospitals nationwide, reforms to ensure low-income and vulnerable patients directly benefit from the 340B program would have a significant impact on such patient affordability and access in the United States.
Explore the research at PHLR.org.