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The 340B Drug Pricing Program is in the limelight once again as the pharmaceutical industry and the medics clash in an on-going dispute over the true financial beneficiaries of the discount scheme.

By Louise Kelly on Feb 14, 2013

While the pharma firms insist the program has strayed from its original purpose of helping poor patients, the hospitals report the welfare of the healthcare system at large has improved. 

The latest development in this saga has been the release of a report on Tuesday (12^thFebruary 2013) from the drug makers that criticizes a Health Resources and Services Administration Agency (HRSA) oversight, made public by the US Government Accountability Office (GAO) two years ago. This inaccuracy means that the program lacks sufficient guidelines on how 340B revenue can be used, leading to questions about how revenue is generated and applied.

Created in 1992, the 340B program requires most drug companies to sell their produce at a large discounts — typically 20 to 50 percent — to hospitals and clinics that treat low-income and uninsured patients. But one reason for the recent reproach is that the program now includes one-third of the nation’s hospitals, triple the number in 2005.  And the real bone of contention is that the government oversight is inadequate in ensuring that participating hospitals are administering drugs purchased under the discount scheme only to eligible patients. With about $6.9 billion worth of drugs – and rising – sold through the program annually, the revenue for the pharmaceutical companies is being reduced by hundreds of millions of dollars a year.  A good enough reason for the industry to contest the apparent deviation of the scheme from its original commendable focus, one would think.

Quick to respond, however, was the trade group for participating hospitals, Safety Net Hospitals for Pharmaceutical Access (SNHPA), who released a report the same day, claiming the missive from the pharma industry is “full of misinformation and contains many unsubstantiated assertions.”  While the SNHPA fully accepted that increased transparency in the program was called for, it condemns the collaborative study from organisations such as the Biotechnology Industry Organization (BIO) and the Pharmaceutical Research and Manufacturers of America (PhRMA) as narrow-minded and “off-base”.  “The program’s benefits are intended for a wider category of patients than only the indigent and uninsured. Moreover, the legislative history makes clear that it is intended to improve all types of health care services, not just access to prescription medicines,” said the SNHPA report.

And while advocate groups including the National Patient Advocate Foundation (NPAF)  have voiced full support for the review of the discount scheme, dramatic changes to the drug program seem unlikely as both the government and the hospitals continue to earn money from the initiative. Pharmaceutical firms may need to lobby a little harder in order to protect their bottom line.