Trump Rethinking Plan to Cut 340B Drug Discount Program

President Donald Trump may be backing off of previously announced plans to limit the federal 340B program, which provides pharmaceutical discounts to hospitals in low-income areas, according to a recent report in Modern Healthcare.

The 340B Drug Pricing Program requires drugmakers that participate in Medicaid to provide discounts on pharmaceuticals to hospitals that serve a high volume of uninsured or low-income patients.

“The 340B program is not a financial burden to taxpayers and represents about only 2 percent of the pharmaceutical industry’s $457 billion in US sales annually,” Tom Nickels, JD, executive vice president of the American Hospital Association, wrote in a press release. “However, the pharmaceutical industry continues to malign the program in hopes of scaling it back or eliminating it – yielding even bigger profits for themselves. That would have devastating consequences for vulnerable populations and communities across the country.”  

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On June 21, a draft executive order on drug pricing was released and contained language to limit the 340B program. However, according to Modern Healthcare, hospital lobby groups have heard that the Administration is stepping back from plans to limit the program. The hospital groups are now under the impression that revisions to 340B will not be included in the final executive order when it is released in the coming weeks.

Pharmaceutical lobby groups have pushed hard to have 340B reformed, claiming that hospitals abuse the program.

“Clinics eligible for the 340B program as part of a federal grant program are required to reinvest any additional resources into services for the vulnerable communities they serve, while current rules allow hospitals participating in the program to profit by reselling discounted medicines with no requirement to ensure patients benefit from the discounts,” the PhRMA.org website reads. “Research shows the 340B program is growing rapidly, driving up costs for patients and payers. This is ultimately distorting the entire health care market. Without reform, the program is expected to continue to grow at an alarming rate and further impact the market.”

PhRMA also argued that consolidation of physician groups into larger hospital systems under MACRA is expanding the scope of 340B to include a majority of PCPs in the country.

“Hospitals are acquiring more independent physician practices, which allows formerly independent practices to access 340B discounts,” PhRMA wrote. “This consolidation drives up costs for patients and payers and reduces patient access to community treatment options. These clinics often operate in wealthier areas and are not obligated to provide treatment for uninsured patients. The 340B program should be reducing patients’ costs, not increasing them.”

—David Costill