By Ryan Yuhas, Director of Federal Government Relations at UPMC
The 340B drug pricing program helps hospitals care for vulnerable patients in some of the most underserved areas of the country. But new cuts to the program could pass increased costs from hospitals to consumers.
Learn more about what this program is and why it matters to you and your community.
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What Is 340B?
Passed by Congress in 1992, the 340B drug pricing program requires that pharmaceutical companies sell outpatient drugs to health care organizations at discounted rates.
Discounts are only offered to health care providers that serve a large number of uninsured and low-income patients — usually in rural communities — and offer vital services to cancer patients and children. The discounts can be as much as 50 percent of a medication’s cost and are negotiated with the drug companies.
Those savings allow facilities that qualify to continue caring for vulnerable populations in some of the most underserved areas of the country. 340B hospitals and clinics also use their savings to invest in comprehensive services, such as trauma care, labor and delivery, and immunizations, as well as treatment for HIV/AIDS and other chronic conditions.
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What Is Changing with the Program?
As of Jan. 1, the Centers for Medicare and Medicaid Services (CMS) started cutting the payment amounts for these medications by 28.5 percent for some hospitals and clinics. For health care providers in the 340B program that is a $1.6 billion loss in reimbursement, according to CMS.
With these dramatic cuts, drug prices will increase. Providers that currently offer care to vulnerable populations will be profoundly affected and likely forced to eliminate or scale back vital programs such as cancer care, mental health, and opioid services. In addition, because cost is the No. 1 reason patients do not fill prescriptions, any increase will put medication further out of reach for even more patients.
Understandably, affected organizations are concerned about how these changes will impact their ability to treat the underserved communities — and even stay afloat.
Advantages of 340B Pricing
The 340B drug pricing program doesn’t just impact the hospitals and clinics being reimbursed. The program also benefits people in these communities who depend on those hospitals and clinics for care.
Why 340B Matters
Without the current levels of 340B Medicare reimbursement, the cost of prescription drugs for the uninsured and underinsured could be passed on to participating hospitals, making it harder for them to treat people with little or no insurance.
If hospitals and clinics have to absorb that cost, some may not be able to afford it and could shut down as a result. The 340B program plays a critical role in creating and caring for vulnerable communities across the country. Given the ever-increasing cost of medications, this program is essential.
A $21 billion health care provider and insurer, Pittsburgh-based UPMC is inventing new models of patient-centered, cost-effective, accountable care. The largest nongovernmental employer in Pennsylvania, UPMC integrates more than 90,000 employees, 40 hospitals, 700 doctors’ offices and outpatient sites, and a 3.8 million-member Insurance Services Division, the largest medical insurer in western Pennsylvania. In the most recent fiscal year, UPMC contributed $1.4 billion in benefits to its communities, including more care to the region’s most vulnerable citizens than any other health care institution, and paid more than $500 million in federal, state, and local taxes. Working in close collaboration with the University of Pittsburgh Schools of the Health Sciences, UPMC shares its clinical, managerial, and technological skills worldwide through its innovation and commercialization arm, UPMC Enterprises, and through UPMC International. U.S. News & World Report consistently ranks UPMC Presbyterian Shadyside on its annual Honor Roll of America’s Best Hospitals and ranks UPMC Children’s Hospital of Pittsburgh on its Honor Roll of America’s Best Children’s Hospitals. For more information, go to UPMC.com.