What is the issue(s) here is larger hospitals such as “Bon Secours (48 hospitals) has been slashing services” at its facility in a poorer, predominantly Black part of Richmond. At the same time, it is ‘investing in the city’s wealthier, white neighborhoods.’” By maintaining the Richmond hospital, it keeps access to the 340B program, provides drugs to the hospital in the wealthy section, and goes around the 340B rules. 340B hospitals are also gobbling up competitors in a way that consolidates health care providers. From the first quarter of 2016 through the first quarter of this year, 340B facilities were responsible for roughly 75% of hospital acquisitions, according to data collected by the Centers for Medicare and Medicaid Services. The
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Angry Bear considers the following as important: 340B Program, Healthcare, law
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What is the issue(s) here is larger hospitals such as “Bon Secours (48 hospitals) has been slashing services” at its facility in a poorer, predominantly Black part of Richmond. At the same time, it is ‘investing in the city’s wealthier, white neighborhoods.’” By maintaining the Richmond hospital, it keeps access to the 340B program, provides drugs to the hospital in the wealthy section, and goes around the 340B rules.
340B hospitals are also gobbling up competitors in a way that consolidates health care providers. From the first quarter of 2016 through the first quarter of this year, 340B facilities were responsible for roughly 75% of hospital acquisitions, according to data collected by the Centers for Medicare and Medicaid Services. The consolidation creates powerful, large hospital systems that raise costs for patients and insurers and creating a financial barrier for patients trying to access medicines.
A study published in Health Affairs found 340B hospitals were expanding into more affluent areas to generate higher profits. The study found “hospital-affiliated clinics registered for the 340B program in 2004 or later were serving wealthier communities which had higher rates of health insurance compared to communities served by hospitals and clinics registered for the program before 2004. Three ways 340B or Healthcare is failing vulnerable patients,” Angry Bear.
Johnson and Johnson believes reimbursing funds after application is a better way to control the issue. This will not hurt large hospitals or ones in richer areas. It will penalize hospitals with poorer residents who do not have the revenue to carry them through the wait. There is an issue, it is with the richer hospitals mostly located in the cities, and this is not the way to solve it.
States Continue to Enact Protections for Patients with Medical Debt
by Maanasa Kona
Commonwealth Fund
In a letter last week, Johnson & Johnson informed certain hospitals of a major change it plans to make in the way it gives out discounts on two drugs. The end result to the change is J&J finds itself in opposition to hospital groups. The federal government is planning to take action.
Starting October 15, Johnson & Johnson will stop providing upfront discounts to disproportionate share hospitals (DSH) participating in the 340B Drug Pricing Program for the plaque psoriasis drug Stelara and the blood thinner Xarelto. Instead, these hospitals will need to purchase the two medications at full price and then submit data to the pharmaceutical company to receive a rebate later for the discounted 340B price.
The issue being? Some hospitals are not so disproportioned. How so? They are now owned by larger hospitals.
The federal 340B Drug Pricing Program, which is administered by the Health Resources and Services Administration (HRSA), enables eligible hospitals and clinics servicing low-income and uninsured patients to purchase outpatient prescription drugs at reduced prices. These are FQHCs or Federally Qualified Health Centers which receive federal funds to provide healthcare services to underserved communities. This would include rural hospitals besides city hospitals.
– Matthew Perry, president and CEO of Genesis Healthcare System, said his Ohio-based organization saves about $56 million per year through the program. The organization brings in about $786 million of total patient service revenue and logged an operating margin of just $1.5 million in its most recent year (when it also received over $14 million of one-time COVID-19 grant money). Perry explains the difference.
“340B is the difference between us operating a razor-thin positive margin or an unsustainable deficit,” he told Congress. “Without 340B savings, Genesis would not be able to continue to operate.”
– Sue Veer, president and CEO of Carolina Health Centers, a federally qualified health center (FQHC) in South Carolina, painted a similar picture. Though generally more willing to acknowledge the program and existing statute’s shortcomings than Perry, she said that the savings help her organization meet its goals as a FQHC and offer services that otherwise would go unfunded. She adds . . .
“We have a pretty robust behavioral health program—I would say 80% of the adult behavioral health services have no source of reimbursement,” she said. “We could not meet the expectations of a patient-centered primary care home where you’re looking at the whole person.”
A delay in reimbursement would cause health centers to run at a deficit.
Many drug companies are concerned about the program because it has grown rapidly over the years: there were 8,100 participating provider sites in 2000, compared to 50,000 in 2020, according to the Commonwealth Fund. A fact sheet from the American Hospital Association shows that hospitals and other covered entities enrolled in HRSA’s 340B program can achieve average savings of 25% to 50% in pharmaceutical purchases.
A spokesperson for HRSA told MedCity News that it informed Johnson & Johnson that the company’s plans for the 340B rebate model are “inconsistent” with the 340B statute and need Secretarial approval.
“The Secretary has not approved J&J’s rebate model,” the spokesperson stated. “HRSA has communicated this information to J&J and will take appropriate actions as warranted.”
The agency declined to say what specific actions it plans to take.
Johnson & Johnson, however, argued that its plan is consistent with the statute.
“The 340B program is not meeting its original goal of allowing safety net providers to obtain discounted medicines for vulnerable patients,” a spokesperson who declined to be named said. “Patients are not realizing the full benefit of the 340B program because of rampant abuse and misuse. To help the 340B Program better serve vulnerable patients, J&J is implementing reasonable, standard business practices used across other government programs and contracts. J&J’s use of reasonable, standard and time sensitive business practices will help the 340B program meet its original intent, and better ensure discounts are more directly benefiting vulnerable patients.
“J&J’s limited scope rebate model is fully consistent with the 340B statute, which specifically references rebates as a payment mechanism, and is expected to mitigate legally prohibited program abuses by improving transparency,” the spokesperson continued.
At least two hospital organizations have come out against Johnson & Johnson’s rebate model. 340B Health, an association of more than 1,500 hospitals, called on HRSA to announce that drugmakers have to continue providing upfront discounts. The organization said the rebate system would violate the 340B statute’s mandate that drugmakers offer eligible drugs “at or below the applicable ceiling price.”
In addition, Johnson & Johnson’s change would hurt safety-net hospitals, argued Maureen Testoni, president and CEO of 340B Health. Testoni said in a statement.
“This shift would impose massive financial and administrative burdens on 340B hospitals, which serve vulnerable patients and underserved communities. It would force these financially strapped hospitals to incur significant costs and float revenue to drug companies by paying full price for 340B-eligible drugs. These hospitals would go without vital resources they need to treat their patients in need while drugmakers and third parties determine when — and whether — to approve 340B rebates.”
The American Hospital Association (AHA), a trade group for nearly 5,000 hospitals, also contacted HRSA after Johnson & Johnson told hospitals of its plan.
“The AHA is monitoring this situation closely and will continue to protect hospitals and the patients and communities they serve from unilateral efforts by drug companies like those announced today by J&J,” the organization said in a notice to AHA members last week.
Update: The story has been updated with information on average hospital savings.