Blog | Healthcare Reform

Why the Election Results Matter For 340B Hospitals

Blog | Healthcare Reform

Why the Election Results Matter For 340B Hospitals

Ted Slafsky provides an insider’s perspective on where the 340B drug discount program is headed after the consequential midterm elections. 

To say it has been a challenging two years for providers participating in the 340B drug discount program would be an understatement. This once-obscure federal program, which was enacted by Congress on an almost unanimous vote 26 years ago, has become one of the pharmaceutical industry’s biggest targets in our nation’s capital.

Successful Track Record

The 340B program has been remarkably effective in meeting its purpose of supporting healthcare providers’ efforts to serve low-income populations, enabling hospitals and clinics to free up resources to care for patients with various chronic conditions, including cancer, diabetes, HIV, opioid addiction, and mental health disease. 

But 340B’s efficacy became significantly compromised after the 2016 elections, despite its strong bipartisan support from the beginning. President Donald Trump, who had campaigned on a platform of taking on high drug prices, deferred to advisers who said that 340B is too big and needs to be reined in. Notwithstanding outcry from both parties, the U.S. Department of Health and Human Services slashed payment to 340B hospitals by close to 30 percent for medicines used to treat cancer and other complicated and deadly conditions. This $1.6 billion cut has forced three-quarters of 340B hospitals to reduce clinical and other patient services, and nearly two-thirds of them have cut staff. The hospitals also have had to reduce the amount of free and discounted drugs, close clinics, and shutter pharmacies altogether. To exacerbate the matter, the administration announced Nov. 1 that it will move forward with its plan to expand these cuts to clinics that were exempt from the original cut. 

What Happened on Tuesday and Why It Matters

The Democrats’ return to power in the House of Representatives could have a significant impact on the 340B program. Reps. David McKinley (R-W.Va.) and Mike Thompson (D-Calif.) have introduced legislation that would nullify the Medicare Part B cuts. Their bill, which has widespread bipartisan support with 200 co-sponsors, will be a key priority for the hospital community.  Although the bill has stalled during the election year, there is a strong chance that repeal of the cuts will become law in 2019.

Providers in the 340B program also should benefit from the implementation of a long-delayed rule that would penalize drug manufacturers that overcharge them. The rule, which was has been delayed five times in the past two years, would also result in the creation of a government website that would enable 340B stakeholders to verify whether they are purchasing pharmaceuticals at the correct price. 

Stay on Your Toes

With changes coming to Washington, the next two years could be a rollercoaster ride for the 340B program. HHS may propose further restrictions including reducing the number of patients that can access discounted drugs and scaling back providers’ ability to partner with contract pharmacies to provide medicines closer to home. It will be critically important for hospital leaders and other 340B program stakeholders to remain active in advocating for support of the program with their Congressional delegations and in ensuring their messages reach the White House. 

Ted Slafsky, MPP, is the founder/principal of Wexford Solutions, Washington, D.C. and the former president and CEO of 340B Health. 

About the Author

Ted Slafsky

Sign up for a free guest account and get access to five free articles every month.


Related Articles | Healthcare Reform

News | Medicare Payment and Reimbursement

State of Medicare: Trustees push back projected date of Part A insolvency, but issues must be addressed

Even though the Hospital Insurance Trust Fund now is expected to be depleted in 2028 instead of 2026, Medicare still faces daunting challenges.

Blog | Strategic Partnerships Mergers and Acquisitions

Healthcare News of Note: New CMS data set makes hospital and skilled nursing facility ownership changes more transparent

Healthcare News of Note for healthcare finance professionals is a roundup of recent news articles: CMS releases a new report on healthcare provider ownership, a new report examines the consequences of the pandemic for Black Americans, and 34% of nurses plan to leave their current job in 2022.

Column | hfma:content/topic/innovation_disruption

Marcus Whitney: 3 healthcare innovation trends that leaders should keep an eye on

The workforce shortage, the behavioral health movement and value-based care are areas with the most momentum among early-stage investors.

Column | Cost Effectiveness of Health

Bringing the healthcare back to healthcare

Affording greater freedom to physicians to practice medicine by easing administrative strictures on them may be the best strategy for ultimately promoting cost effectiveness of health, says Martin Bluth. But physicians also should be well educated in the economics and business of healthcare.