A Different View of the 340B Program

March 15, 2014

As a practicing hospital oncologist, I was troubled by the article “The 340b Drug Discount Program: Oncology’s Optical Illusion” in the November 2013 issue of ONCOLOGY.

TO THE EDITOR:As a practicing hospital oncologist, I was troubled by the article “The 340b Drug Discount Program: Oncology’s Optical Illusion” in the November 2013 issue of ONCOLOGY. The piece does not square with my 33 years of experience and appears to be more aligned with the pharmaceutical industry’s assessment of the program.

While nicely footnoted, the article includes various misstatements, omissions, and errors largely based on studies and articles funded by the drug and insurance industries. Twenty-two years after its creation, 340B continues to meet its original goal of enabling providers who carry a disproportionate share of care for low-income individuals to “stretch scarce federal resources as far as possible, reaching more eligible patients and providing comprehensive services.” Hospitals, including mine, use their program savings to make medications available to uninsured and low-income patients at little or no cost. We also use our savings to fund clinics and other community services for our most vulnerable patients.

As a long-time Michigan resident, I can attest to how important 340B is to cancer patients in my state. From the city of Detroit, where I focus my attention on treating a largely minority population, to the rural Upper Peninsula, 340B enables vulnerable patients to access high-quality, affordable, convenient care. At the Henry Ford Health System, the program has enabled us to operate three clinics in metropolitan Detroit dedicated to providing care for the underserved. In addition, it helps offset a fraction of the cost of uncompensated care that we provide to poor and uninsured Detroiters. Thanks to 340B savings, Aspirus Hospital in Ontonagon has opened a cancer clinic in one of the most remote areas of our state. Patients are now able to receive oncology treatment and follow-up care near their home rather than being forced to travel 150 miles or more. It’s no surprise that 340B hospitals provide close to two-thirds of all uncompensated hospital care in the country, according to the American Hospital Association.

Over the years, the program has been expanded to children’s and rural hospitals, with strong bipartisan support in Congress. Patients are now able to access their medicines closer to home through contracts with community drugstores. Despite this growth, the program is very small, just 2% of the entire $325 billion US drug market. The authors’ recommendations for improvement would be counterproductive. Limiting the program only to indigent patients or redefining it as a patient entitlement would only boost Big Pharma’s already healthy profit margins while leaving safety-net providers with fewer resources to carry out their missions.

The practice of medicine is undergoing fundamental changes unrelated to the 340B program. Specialist physicians are choosing to work more closely with hospital systems every day. Rather than place blame on a very important program, we should work together to address the most pressing challenges facing our community-declining reimbursement, high drug costs, and the need for more investments in cancer research and prevention.

Robert Chapman, MD

Dr. Chapman is the Director of the Josephine Ford Cancer Institute at Henry Ford Health System and serves on a number of boards, including the Michigan Society of Hematology and Oncology and Safety Net Hospitals for Pharmaceutical Access.

THE AUTHORS RESPOND: Dr. Chapman provides a different-but insufficient-perspective on the 340B drug discount program. While he asserts that the original article “includes various misstatements, omissions, and errors,” he does not specify a single point that he considers to be in error. This broad-brush-stroke criticism, without supporting statements, does little to further any reader’s understanding of this important issue.

Dr. Chapman’s assertion that the initial article is based on “studies and articles funded by the drug and insurance industries” is wholly incorrect and demonstrates an acute misunderstanding of the current scrutiny of the program. Regarding the Health Resources and Services Administration, the agency responsible for 340B oversight, Congressman Joe Pitts has stated: “This report from HHS’s [Health and Human Services’] own watchdog raises serious questions about whether the 340B program is serving its core mission to help the uninsured.” Senator Orrin Hatch has commented: “It’s unacceptable that inconsistent, lax oversight has allowed the 340B program to be gamed-jeopardizing its core mission of helping low-income Americans.”[1] In early February, the Office of Inspector General (OIG) issued a memorandum citing serious flaws in many of the contract pharmacy arrangements in the 340B program.[2]

Dr. Chapman does describe an excellent example of the use of the program as it was originally intended to be used. However, it is unknown how many 340B programs are like this. There is little in the structure of the 340B statute that specifies that eligible “covered entities” do operate appropriately. Qualifying for the program is based on archaic metrics of inpatient Medicare and Medicaid care, which have little relation to resources devoted to outpatient cancer patients. More problematic, once an institution qualifies for the program, the statute does not effectively specify how the funds are to be deployed. The substantial money generated may be spent on patients-or it may be spent on capital projects. Independent inquiries made by Senator Chuck Grassley havedemonstrated that many institutions deriving huge profits from the program spent relatively little on charity care.[3]

Indigent patients need access to prescription drugs and medical care. Appropriate oversight and reform of the 340B program is needed to ensure that the program does just that. Building patient support programs around patients, rather than institutions, may be better still and would avoid perceived or real conflicts of interest.

David Eagle, MD
Roberta Buell, MBA
Jeffrey Vacirca, MD

Dr. Eagle is an oncologist with Lake Norman Oncology in Mooresville and Huntersville, North Carolina. Ms. Buell works for onPoint Oncology, Inc. Dr. Vacirca is an oncologist with North Shore Hematology Oncology Associates, PC, in East Setauket, New York. Drs. Eagle and Vacirca are members of the Community Oncology Alliance.

References:

1. February 7, 2014: GOP Senate, House lawmaker inquiry reveals weak administration oversight of 340B drug discount program for uninsured, low-income Americans. Available from: http://www.communityoncology.org/site/blog/detail/2014/02/07/february-7-2014-gop-senate-house-lawmaker-inquiry-revealsweak-administration-oversight-of-340b-drug-discount-program-for-uninsuredlow-income-americans.html. Accessed February 10, 2014.

2. Office of Inspector General. Memorandum report: contract pharmacy arrangements in the 340B program. 2014 Feb 4. Available from: http://oig.hhs.gov/oei/reports/oei-05-13-00431.pdf. Accessed February 10, 2014.

3. Alexander A, Neff J, Garloch K. Senator: Hospitals profited on drugs for poor, uninsured. The Charlotte Observer. April 3, 2013. Available from: http://www.charlotteobserver.com/2013/04/03/3956004/senator-3-nc-nonprofit-hospitals.html#.UvluWswo6po. Accessed February 10, 2014.