The Department of Health and Human Services is scrapping the 340B Drug Pricing Program’s rebate model, according to a Thursday court filing. Hospitals are reacting with glee, as the rebate model would have added administrative headaches and forced them to return millions in discounts.
The model was slated to go live on the first of the year, but courts blocked implementation before it could take effect, citing procedural and legal issues.
The 340B program allows hospitals to buy outpatient drugs at steep discounts, with the purported purpose of helping them fund care for low-income and uninsured patients. The now-axed rebate model would have invited drugmakers to participate voluntarily in a rebate-based discount system.
Basically, instead of the provider receiving a discount upfront at purchase, the 340B discount would be applied after purchase via rebate — and subject to tedious data submission requirements.
The pilot aimed to boost transparency and prevent duplicate discounts, but it risked introducing financial challenges and added administrative burdens that would have likely disproportionately affected the smaller, safety net providers that the 340B program was initially designed to assist when it was established in 1992.
For instance, Bill Keeton — chief advocacy officer at Vivent Health, a nationwide provider of HIV care for low-income patients — told MedCity News in November that the model would create difficult cash flow problems for healthcare providers, especially organizations like his that have to buy HIV medications, which are incredibly expensive.
Biktary, the most popular medication used to treat HIV, costs about $4,200 per month. Under 340B, clinics pay about half of that, but the rebate model could force clinics to front the full cost temporarily.
Because of these problems, HHS has faced several lawsuits aiming to kill the model, most notably one filed in December by the American Hospital Association (AHA) and a coalition of other hospital groups.
Now that the rebate model is being thrown out, hospitals are relieved.
“A rebate program that undermines safety-net hospitals’ ability to offer more comprehensive care would only harm the nation’s most vulnerable communities,” AHA CEO Rick Pollack said in a statement.
Tom Kraus, vice president of government relations at the American Society of Health-System Pharmacists, also applauded the move, calling the rebate model “unworkable and a threat to program integrity” in his statement.
“Rebates in both the 340B program and the Inflation Reduction Act negotiated pricing program improperly shift costs from manufacturers to providers, effectively raising the costs of medications in direct opposition to Congressional intent. Providers should not shoulder increased costs for programs intended to require manufacturer discounts,” he stated.
If HHS seeks to reform the 340B program’s administrative processes going forward, it has agreed to issue a new announcement and receive comments from the public.
Photo: Anastassiya Bezhekeneva, Getty Images
