01 Nov Safety Net Hospital Earn Modest Profit from Medicare’s Discount Drug Program
MedicalResearch.com Interview with:
Dr. Conti
Rena M. Conti, PhD, Associate Professor
Department of Markets, Public Policy and Law
Questrom School of Business
Boston University Boston, MA 02215
Co-Authors:
Sayeh S. Nikpay, PhD
Melinda B. Buntin, PhD
Vanderbilt University School of Medicine
MedicalResearch.com: What is the background for this study?
Response: The federal 340B program provides deep discounts on the acquisition cost of prescription drugs for participating hospitals and places no limits on what hospitals charge patients and insurers. Congress intended 340B profits generated from hospital participation to subsidize the provision of safety net care for patients residing in the community.
This study is the first to estimate the size of profits hospitals participating in the 340B drug discount program collect from Medicare patients for the outpatient clinic administration of prescription drugs.
MedicalResearch.com: What are the main findings?
Response: In 2016, hospitals reaped a total of $1.9B in profit from administering 340B-discounted drugs to Medicare patients. Per hospital mean 340B profits amounted to $2.5M. 340B profits are small in terms of overall hospital budgets but significant compared to at least one measure of safety net care provided to their communities. There is considerable state to state variation in hospital 340B participation, the profits reaped from 340B and hospital safety net care provision.
MedicalResearch.com: What should readers take away from your report?
Response: More than half of all hospitals in the U.S. profit from the outpatient administration of prescription drugs to seniors. These profits are significant relative to the value of safety net care hospitals provide to their communities.
MedicalResearch.com: What recommendations do you have for future research as a result of this work?
Response: To comprehensively assess the value of 340B to participating hospitals, data on the profits reaped from sources beyond prescription drugs administered to seniors are needed. Future research should systematically examine the impact of 340B profits on the benefits hospitals provide to their communities.
Any disclosures? This work was funded by a grant from the Commonwealth Fund.
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Last Updated on November 1, 2019 by Marie Benz MD FAAD