Heated and deep-pocketed battle erupts over 340B drug discount program

CMS struck a blow to the 340B drug discount program this month announcing a final rule to cut Medicare payments for hospitals enrolled in the program by 28%, or about $1.6 billion.

CMS struck a blow to the 340B drug discount program this month announcing a final rule to cut Medicare payments for hospitals enrolled in the program by 28%, or about $1.6 billion. The American Hospital Association and others quickly filed suit, arguing that the agency lacks the authority to slash the payments and that the rule undermines the intent Congress had when creating the program. Approximately 40% of U.S. hospitals now buy drugs through the program, according to a 2015 report from the Government Accountability Office. Richard Sorian, of the hospital lobbying group 340B Health, said that for some small, rural hospitals the funding cut "could actually be the difference between staying open and closing." Supporters of the CMS rule, including drugmakers, argue that the program has grown beyond its original intent because hospitals have pocketed the discounts to increase profits and not to help indigent patients. Stephen Ubl, president of the Pharmaceutical Research and Manufacturers of America, said the program "needs fundamental reform" and that the latest rule change is merely a good first step. His group is calling for changes such as limiting which hospitals should be eligible for 340B price breaks and making sure needy patients benefit when hospitals buy discounted drugs.