340B: A Test Market for Health Care Reform?
This article was originally published in RPM Report
The 340B program got a lot of attention from pharmaceutical industry lobbyists during the health care reform debate. Now it may be getting more attention from the commercial side of the business. Expanded discounts remains a legislative threat—but increased sales to “safety net” purchasers is also a business opportunity.
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A proposed rule issued by HRSA probably changes prescription drug spending in the US by about .005%. But it will have an impact on almost every pharmaceutical company pricing department, and offers a valuable illustration of some of the bigger themes of implementing the reform law overall.
The health care reform law dramatically expanded the number of entities eligible to purchase drugs via the federally administered 340B program, while simultaneously increasing the size of the mandatory discounts given to covered entities. Manufacturers are understandably frustrated. Rather than hope for elimination of the program, however, they may be better served working within the system to contain its impact.
The health care reform legislation enacted in 2010 expanded eligibility for the 340B discount while lowering prices under the program. Manufacturers were able to fend off expansion of the discount to the inpatient setting, but failed to get the program itself eliminated as expanded insurance phases in. In 2011, there is plenty of activity in Washington that will affect the growth of the 340B program and the impact of the discounts on pharma.