CMS’ Proposed 340B Drug Rule Will Harm Low-Income Patients

CMS is proposing massive changes to the 340B drug program that will make prescription drugs more expensive to low-income patients and the safety-net hospitals that serve them.

The Trump Administration’s proposal, contained in the proposed outpatient prospective payment system rule released on Thursday, proposes to pay for affected drugs (other than vaccines) purchased through the 340B program at the average sales price (ASP) minus 22.5%, rather than ASP plus 6%. The 340B program only involves certain hospitals serving disadvantaged populations: disproportionate share hospitals (DSHs), children’s hospitals and cancer hospitals exempt from the Medicare prospective payment system, sole community hospitals, rural referral centers, and critical access hospitals.

“It is unclear why the Administration would choose to punitively target 340B safety-net hospitals serving vulnerable patients, including those in rural areas, rather than addressing the real issue: the skyrocketing cost of pharmaceuticals,” American Hospital Association EVP Tom Nickels said on Thursday. “CMS repeatedly cites the fact that Medicare expenditures on drugs are rising due to higher drug prices as an impetus for its proposal....Yet, its proposed 340B policy change does nothing to directly tackle this issue.”

The 340B program has garnered bipartisan support since its creation in the early 1990s, but has been criticized by the pharmaceutical industry, which has generally enjoyed steadily increasing profits over the same time.

"The patients who benefit from the much-needed 340B program are the ones who will have their access to care threatened,” AHA’s Nickels said.