Testimonies focus on benefits of 340B Drug Program

Various testimonies were provided in a hearing before the House Committee on Energy and Commerce examining how covered entities are using the 340B Drug Pricing Program. The hearing discussed various issues, including how covered entities (1) track and use savings from the 340B Program; (2) use contract pharmacy arrangements; (3) use child sites; and (4) interact with the Health Resources and Services Administration (HRSA). In addition, the hearing focused on the requirements different types of covered entities must meet in order to receive reduced prices through the 340B Program.

Neither the 340B statute nor HRSA guidance, however, explain how 340B entities must use savings from the program. There is no requirement that the discounted 340B price be passed on to uninsured patients who seek treatment at 340B entities. As a result, the 340B entity will acquire the drug at a discounted price, but the uninsured patient may pay the full list price for the drug. While some 340B entities pass savings on to uninsured patients, it has been reported that some use savings from the 340B Program to pay for the operations of the covered entity, such as marketing. The House Committee convened the hearing to examine current practices and usage of savings generated by the 340B Program.

Background

Established by Congress, the 340B Drug Pricing Program mandates that drug manufacturers provide outpatient drugs to eligible health care organizations, also known as covered entities, at reduced prices to remain eligible for reimbursements through entitlement programs such as Medicaid and Medicare. Covered entities are eligible to receive discounts on outpatient prescription drugs from participating manufacturers and report saving between25 and 50 percent of the average wholesale price for covered outpatient drugs.

Covered entities do not receive discounts on inpatient drugs under the 340B Program. Covered entities can realize substantial savings on outpatient drugs through 340B price discounts and generate 340B revenue by selling 340B drugs at a higher price than the discounted price at which the covered entity obtained the drug.

Testimonies

Shannon A. Banna, Director of Finance and System Controller, at Northside Hospital, Inc., noted that the 340B Program savings allow the hospital to provide drugs to some of its most vulnerable patients and expand its charity care and community programs. In addition, the hospital met 340B Program requirements, with only a single instance of inadvertent diversion of less than $7 in an HRSA audit. Northside is an independent Georgia non-profit corporation that owns or operates an extensive network of health care facilities in Georgia, including three acute care hospitals located across the northern metropolitan Atlanta area with a total of 926 operational beds and more than 150 ancillary and physician service sites located across the 28 county Atlanta Metropolitan Statistical Area.

Michael Gifford, President and Chief Executive Officer, of AIDS Resource Center of Wisconsin, a non-profit providing health care services and support for HIV patients, stated that the savings generated by the 340B Program allowed entities to purchase certain medications at a price lower than what these medications are normally purchased for. In turn, these savings that are generated off the reimbursement for the medication purchased using 340B pricing are then reinvested into programs and services that directly benefit the individuals the covered entity serves.

Ronald A. Paulus, MD, President and CEO, of Mission Health Systems, Inc., testified that six Mission Health hospitals qualify to participate in the 340B Program based on either disproportionate share hospital (DSH) or critical access hospital status. The hospitals use of 340B Program savings directly reflects the intent and design of the 340B Program, going to support high quality, safety net services and programs many of which are otherwise unavailable in the region and would be unavailable absent the 340B program. He noted that funds provided by 340B program savings were integral to the hospital’s work.

Charles B. Reuland, Executive Vice President and COO, of The Johns Hopkins Hospital stated that participation in the 340B Program allowed the hospital to provide care and service to vulnerable individuals and families. As a safety net hospital, Johns Hopkins uses its 340B savings to respond to emerging crises and to continue serving the most vulnerable patients in Baltimore. Reuland noted that since 2009, Johns Hopkins has offered a charity program designed to improve access to effective, compassionate, evidence-based primary and specialty care to uninsured and underinsured patients from the neighborhoods immediately surrounding the hospital.

Sue Veer, President and CEO of Carolina Health Centers, Inc., a federally qualified health center that serves as the primary care medical home for 26,952 patients in the west central area of South Carolina, noted that using 2016 as a sample, 142,045 or 43.1 percent of the 329,679 prescriptions dispensed at the system’s two pharmacies were filled with 340B purchased inventory for eligible patients. The system’s total 340B savings for 2016—calculated as the net margin after the sale of the drug—was $561,620. She further noted that the savings enabled the health center to provide deeply discounted pharmacy services to those patients eligible for the income-based sliding fee program, offer medication therapy management to promote clinical and cost effective care, and assist patients with qualifying for manufacturer Patient Assistance Programs.

Health, drug plan star ratings improve for 2018

CMS issued its star ratings for Medicare health and drug plans for 2018, which according to the agency will assist consumers with information on high-quality health choices for coverage. According to CMS, most areas across the country have Medicare Advantage and Part D plans with four or more stars. In 2018, approximately 73 percent of Medicare Advantage enrollees with prescription drug coverage will be in plans with four and five stars. This rose from the approximately 69 percent of enrollees in four and five star plans in 2017. Approximately 44 percent of Medicare Advantage plans that offer prescription drug coverage will have an overall rating of four stars or higher in 2018.

Medicare Part D prescription drug plan enrollees are also benefiting from improved access to high-quality plans. In 2018, approximately 47 percent of enrollees in stand-alone prescription drug plans will be in plans with four and five stars. This is an increase from the approximately 41 percent of enrollees in four or five star plans in 2017. Approximately 52 percent of stand-alone prescription drug plans will have a rating of four stars or higher in 2018.

The number of Medicare Advantage plans available to individuals to choose from is increasing from about 2,700 to more than 3,100 nationwide. More than 85 percent of people with Medicare will have access to 10 or more Medicare Advantage plans.

Premiums

CMS also estimated that the Medicare Advantage average monthly premium will decrease by 6 percent to $30 in 2018 from an average of $31.91 in 2017. About 77 percent of Medicare Advantage enrollees remaining in their current plan will have the same or lower premium for 2018. CMS noted that the average basic premium for a Medicare prescription drug plan in 2018 is projected to decline to an estimated $33.50 per month.

$9.8M in refunds for consumers purchasing ‘fat burning’ health products

Almost a quarter of a million refund checks totaling more than $9.8 million will be issued to consumers who purchased “fat burning” and “weight loss” products and other dietary supplements, DVDs, or skin creams, including Pure Green Coffee Bean Plus and RKG Extreme, from Health Formulas LLC and related companies. The Federal Trade Commission (FTC) noted that the average refund per consumer will be $43.

According to the FTC’s original complaint, Health Formulas LLC, its owners, and its related companies, including Simple Pure Nutrition, advertised their products using fake “free trials,” tricked people into disclosing credit and debit card information, and then enrolled them without their permission in a costly negative-option membership program that charged them monthly for new shipments.

A subsequent court order in 2016 settled the FTC’s charges by permanently banning Health Formulas and the other 41 related companies from advertising or selling weight-loss supplements and negative option sales plans, and prohibited them from making unsupported health claims for other products, debiting people’s bank accounts without their consent, and calling consumers who asked not to be called again. It also required them to turn over approximately $10 million in assets.

Narrow MA networks reduce cost at what price?

More than one-third (35 percent) of Medicare Advantage enrollees were in “narrow” network plans, which insurers create to greater control the costs and quality of care provided to enrollees in the plan. According to a Kaiser Family Foundation (KFF) report, the size and composition of Medicare Advantage provider networks is particularly important to enrollees when they have an unforeseen medical event or serious illness. As of 2017, 19 million of the 58 million people on Medicare are enrolled in a Medicare Advantage plan, yet KFF noted that little is known about their provider networks.

Accessing this information may not be easy for enrollees and comparing networks could be especially challenging. The report noted that beneficiaries could face significant costs if they unknowingly went out-of-network. In addition to the differences across plans, the report discussed questions for policymakers about the potential for wide variations in the healthcare experience of Medicare Advantage enrollees across the country.

Findings

KFF examined data from 391 plans, offered by 55 insurers in 20 counties, which accounted for 14 percent of all Medicare Advantage enrollees nationwide in 2015. In addition to the narrow network plans, Medicare Advantage networks included less than half (46 percent) of all physicians in a county, on average. The network size also varied greatly among Medicare Advantage plans offered in a given county.

For example, while enrollees in Erie County, NY had access to 60 percent of physicians in their county, on average, 16 percent of the plans in Erie had less than 10 percent of the physicians in the county while 36 percent of the plans had more than 80 percent of the physicians in the county. Access to psychiatrists was more restricted than for any other specialty. Medicare Advantage plans had 23 percent of the psychiatrists in a county, on average; 36 percent of plans included less than 10 of psychiatrists in the county. Some plans provided relatively little choice for other specialties as well—20 percent of plans included less than 5 cardiothoracic surgeons, 18 percent of plans included less than 5 neurosurgeons, 16 percent of plans included less than 5 plastic surgeons, and 16 percent of plans included less than 5 radiation oncologists.

Conversely, broad network plans tended to have higher average premiums than narrow network plans, and this was true for both HMOs ($54 versus $4 per month) and PPOs ($100 versus $28 per month).

KFF noted that CMS should consider strategies to improve the quality of information available to current and prospective Medicare Advantage enrollees. For instance, accurate, up-to-date provider directories to inform beneficiaries as they choose plans, along with the agency’s proposal to review all Medicare Advantage networks at least every three years.