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340B Drug Discounts

The article "Unintended Consequences: How Government Policies Have Increased the Cost of Cancer Care" in the 9/25 issue gives a highly inaccurate and one-sided view of the oncology issue as it relates to the 340B drug discount program.

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In truth, several powerful forces are at work to drive private practices and hospitals into closer working relationships. These include financial pressures on private oncologists due to lower Medicare reimbursements under the Medicare Modernization Act of 2003, the move towards integrated delivery systems and accountable care organizations. There is no credible data showing 340B hospitals are buying up oncology practices any faster than hospitals outside the program.


The 340B program was specifically designed to give safety-net hospitals an additional funding mechanism to stretch their resources. Since they must serve high percentages of poor patients in order to be eligible for the program, savings from 340B are de facto used to help the underserved.


Private oncologists regularly shunt their poorest patients to the nearest safety-net provider for treatment. Why? Because they make little or no money on these individuals. In turn, safety-net hospitals are obligated to treat all patients, regardless of their ability to pay. This is why they receive discounted chemo drugs from the pharmaceutical industry under 340B. I could understand private oncologists' resentment more if they actually treated the underserved. Most do not.


Safety-net hospitals sometimes do charge more for oncology services to our insured patients-because we must shoulder the enormous burden of caring for all the people who cannot pay for treatment. Hospitals also offer a much broader range of oncology services, including advanced diagnostics, surgery, radiation therapy, infusion services, patient and family counseling, home care services and palliative care.


The 340B program grew between 2005 and 2011 for two reasons. First, Congress made rural hospitals eligible-most of which have 25 beds or less. Second, the Health Resources and Services Administration changed its bookkeeping rules, requiring hospitals to register off-site clinics as separate 340B entities. In fact, since 2010 there have been only six net-new Disproportionate Share Hospital added to the program.


As much as they would like, private oncologists cannot turn the clock back to better financial times. Changes in the health care marketplace are steadily pushing specialty practices of all kinds into the arms of hospitals. Blaming the 340B drug discount program is both misleading and unproductive.


Robert Chapman, MD




Josephine Ford Cancer Institute


Detroit, Michigan


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