340B and Hospital Specialty Pharmacies

340BCreated all the way back in 1992 as a federal program, the 340B Drug Discount Program required that all drug manufacturers provided their medications and treatments on an outpatient level to eligible HCOs (Health Care Organizations) at appreciably reduced prices. Although many people don’t connect the two, the 340B Program was actually a section of the Public Health Service Act (PHSA) that was signed into law by then President George H. W. Bush.

The intent of the program according to the the HRSA (U.S. Department of Health and Human Services, Health Resources and Services Administration) was to allow covered entities to “stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” The intended purpose of the new program was aimed at both maintaining the levels of services provided to patients, while at the same time lowering the patient’s medication costs. Although, as numerous “program non-eligible” independent pharmacy owners have been telling everyone for many years now, perhaps some additional adjectives regarding the program’s pricing discounting should include “extraordinary, seriously, crucially, notably, remarkably, strikingly, glaringly, exceptionally and unusually” when describing the pricing reductions and what has resulted. To fully comprehend what the results of the 340B Drug Discount Program really are, many simply point to what’s been referred to as the “Hospital Specialty Pharmacy Explosion” that’s been seen in most major hospitals and healthcare centers across the nation the past decade.

Did the 340B Program Cause the Increase of Hospital Specialty Pharmacies?

Since its inception in 1992, the 340B Pricing Program has been “accused” to be the primary catalyst for the rapid growth and expansion of specialty pharmacies in hospitals and healthcare system facilities. Let’s take a quick look at a few of the primary reasons this growth trend will continue to accelerate across the USA:

– The potential for sizable profits through the acquisition of discounted specialty medications via the 340B Drug Pricing Program.
– The potential increase in revenue that having a specialty pharmacy allows the hospital to generate by being able to offer new services to potential patients that are afflicted with complex and chronic diseases & disorders that are typically treated with specialty drugs and medications.
– Use of the specialty pharmacy by the hospital’s own staff of employees helping to reduce the hospital’s overall internal benefits costs.
– Increased revenue through the integration of the hospital’s own specialty pharmacy services with Accountable Care Organizations (ACOs), which thus provides incentives for increased services such as patient monitoring and adherence coverage.

The point is that the 340B Drug Pricing Program has always been the catalyst for the growth (or explosion!) of specialty pharmacies at hospitals. And it will continue to be doing that for quite a while in the future according to all projections by experts. The reality is that the hospital that owns its own specialty pharmacy avoids paying any of the fees to a 340B contract pharmacy. Instead, by operating their own specialty pharmacy, the 340B hospital can purchase the required specialty drugs at discounts of seventy to one-hundred percent (70% to 100%!) off the list price. These potential profits from 340B prescriptions essentially provide all the encouragement that a hospital would ever need to invest in owning and expanding its own specialty pharmacy.

If one reads the latest national survey regarding hospital pharmacy practices that was recently released by the ASHP (The American Society of Hospital Pharmacists), the undeniable primary goal of all hospitals and healthcare systems is to maximize their potential ROI (return on investment) in regards to the “capture” of the potentially lucrative specialty pharmacy dispensing revenues. When one looks at it like that, it’s pretty easy to see why in early 2019 almost three-quarters (or seventy-five percent) of all of the major US hospitals (with 600+ beds) already owned their own specialty pharmacy. It’s currently estimated that roughly about twenty percent (20%) of all US hospitals owned a specialty pharmacy. Compare this to the ASHP survey released back in 2016, when approximately only nine percent (9.1%) of all hospitals had a specialty pharmacy in-house. To help keep everything in its proper perspective, it’s important to note that currently it’s estimated that only approximately a little over 30% (or one-third) of all US hospitals actually participates in the 340B Drug Pricing Program. However, drugs sold at 340B pricing now accounts for over five percent (5%) of all medications purchased in the USA annually. Lastly, spending on 340B drug purchases in the year 2016 alone was estimated to be approximately $16.2 billion.

Find a Pharmacy Consulting Firm With Experienced 340B Experts On Staff to Help You!

If you’re considering adding to or expanding your 340B program, then you would probably agree from previous experience that a large portion of your attention must be focused initially on the structure, scope, and data management required. Any inattention now can easily lead to unwanted results such as improper program utilization, which then can obviously result in some extremely large reimbursement and repayment demands following an audit. Paybacks of several hundreds of thousands to even several millions of dollars are not unusual. HCC has health system pharmacy experts and 340B program experts in-house that can identify all of your existing and potential areas of risk exposure, plus provide you with the remedial solutions required to best protect a healthcare system from adverse regulatory and payer outcomes.

About HealthCare Consultants

From major hospitals and healthcare systems to individual community pharmacies, HCC has been the nationally renowned pharmacy consulting firm of choice for over 30+ years now. We work with businesses of every size – from the corner drug store to national corporations and organizations – with our primary goals being: to improve your business’s operations and help increase your company’s profitability. We can help and assist you with expert advice in any area of your pharmacy business or practice.

We urge you to contact us today to see how our Pharmacy Consulting services can help you improve your business now, plus be ready for the future. With a full-time staff of in-house Pharmacy Consultant specialists, HCC can answer any questions that you may have in all pharmacy settings. Contact us online or call us today at 800-642-1652 for a free consultation.

 


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