In August, as many as 1,500 additional hospitals, including children's hospitals, free-standing cancer centers, critical access hospitals, rural referral centers and sole community hospitals, became newly eligible to participate in the 340B Drug Pricing Program as a result of the passage of the Patient Protection and Affordable Care Act.
The number of provider sites participating in the 340B program will rise by over 40% – from about 14,000 to nearly 20,000 – factoring in newly eligible clinics and health centers, according to the U.S. Department of Health and Human Services Health Resources and Services Administration, which administers the program. HHS Secretary Kathleen Sebelius stated that by expanding the 340B program to make discounted outpatient prescription drugs available to new enrollees, these enrollees will use the savings from these discounts to make drugs more affordable to patients and expand their access to other necessary health care services.
Entities interested in participating in the 340B program must complete the 340B registration process by submitting all required documents to HHS by September 27 and waiting at least three days to receive HHS confirmation of their eligibility to participate in order to be added for the next quarter.
Why 340B Matters To Providers: Cost Savings on Outpatient Drugs
Generally, the 340B program requires pharmaceutical drug manufacturers participating in the Medicaid program to provide discounts on covered outpatient drugs purchased by specified government-supported facilities (i.e., 340B covered entities) that are administered to patients. The amount of these discounts is comparable to the best discounts that state Medicaid programs are entitled to receive, net of the rebates states collect by law from manufacturers. 340B discounts result in average savings of up to 50% of the cost for covered outpatient drugs.
In addition to the cost savings available through the 340B program, the 340B prime vendor program provides additional savings to 340B participants registered with the prime vendor, Apexus, Inc., a non-profit entity whose sole purpose is to negotiate even better prices than those mandated by law. Apexus claims to negotiate prices with an average discount of more than 15% off of the mandatory price for 340B.
The 340B program currently is limited to outpatient drugs. However, during the health reform efforts over the past few years, provisions were added to a bill that would have included inpatient drugs in the program. The pharmaceutical industry successfully lobbied to remove these provisions, but with many parties in Washington, D.C. interested in adding inpatient drugs, it may only be a matter of time before 340B is expanded to cover inpatient drugs as well.
Pharmaceutical Industry Interest In 340B Growing
Apexus VP Christopher Hatwig believes more pharmaceutical manufacturers will choose to participate in the prime vendor program, according to a recent report by The RPM Report, a Washington, D.C.-based group made up of independent pharmaceutical industry consultants and journalists. This is because big pharma realizes that the federal government is only going to be an even more important partner in the long run. Hatwig thinks many pharmaceutical manufacturers, especially those with orphan drugs in their pipeline such as Genentech, view the 340B program as an opportunity to learn how to compete effectively in a government-administered marketplace.
Considering that the market served by the 340B program, which already totals an annual spend of more than $5 billion on pharmaceutical drugs, includes uninsured individuals who may soon be gaining insurance through Medicaid or federally organized health exchanges, it seems like a good time to be in the market.
Additional information about the 340B program and the registration process can be found at www.hrsa.gov/opa/.