Increases in Part B Drug Utilization at Enrolling 340B Hospitals

The 340B Drug Discount Program has expanded significantly in recent years. In 2017, 340B covered entities purchased more than $19 billion in drugs at the 340B price, representing 114 percent growth since 2014. Against this backdrop, the program has come under increased scrutiny from legislators, government agencies, and independent researchers.

In June 2015, the Government Accountability Office (GAO) observed that per-beneficiary spending at 340B Disproportionate Share Hospitals (DSH) exceeded spending at non-340B hospitals by a wide margin. In summarizing its findings, GAO noted that the difference between Medicare reimbursement and the 340B acquisition cost creates a “… financial incentive at hospitals participating in the 340B program to prescribe more drugs or more expensive drugs to Medicare beneficiaries.” GAO noted that this incentive could have negative financial implications for Medicare and its beneficiaries. In March 2018, researchers at Milliman found that per-patient pharmacy spend at 340B hospitals exceeded spend at non-340B hospitals within the commercially insured population as well.

Our study seeks to build upon the GAO and Milliman findings and explore whether hospitals that enroll in the 340B program exhibit increases in drug spend per beneficiary after enrolling. This study benchmarks changes in spending at 340B hospitals against a control group of non-340B hospitals to help ensure that perceived behavior changes are not simply the result of broader changes in the market (new therapies, inflation, etc.). Further, this study limits the beneficiaries analyzed at each enrolling 340B hospital to those seen at the 340B hospital before and after enrollment. In this way, the analysis focuses on actual changes in prescribing behavior at switching hospitals rather than a changing patient population.

Read the paper.

This study was funded by the Pharmaceutical Research and Manufacturers of America.