On January 17, 2020, the Medicare Payment Advisory
Commission (MedPAC) held its first meeting of the year, including a session
discussing a report requested by the House Energy and Commerce Committee on
whether the 340B program creates incentives for participating hospitals to use
more expensive drugs and, if so, whether there is a corresponding impact on
patient cost-sharing. MedPAC’s analysis, which focused on cancer drug spending
for five major cancer types, found no conclusive evidence that the 340B program’s
discounts incentivized increased drug spending. There was some evidence of
statistically higher spending on cancer drugs to treat lung and prostate cancer
at 340B hospitals, but the Commission noted that these effects were likely not
generalizable to other conditions. Moreover, the Commission stated that
there was no identifiable link between those increases and incentives from the
340B program. The full results of the analysis will be published in MedPAC’s
March 2020 report, and the slides presenting the initial results can be found here.
A summary of the Commission’s conclusions and comments from the MedPAC
Commissioners is below.
spending at 340B hospitals was not attributable to any program incentives.
The Commission’s analysis
considered average cancer drug spending per month across Medicare Parts B
and D for breast, colorectal, prostate and lung cancer, as well as
leukemia and lymphoma, and relied on data preceding the 2018 reduction in
Medicare Part B payments for 340B drugs. MedPAC found that average
spending by cancer type at 340B hospitals ranged from 2-5% higher compared
to non-340B hospitals and from 1% lower to 7% higher compared to physician
offices. 340B hospitals in the study were more likely to be larger, to be
teaching hospitals, and to treat patient populations that were younger,
more disabled, and more frequently eligible for discounted cost-sharing
for Part D drugs. The analysis also found no consistent pattern in changed
spending behavior for hospitals that were newly eligible for 340B,
suggesting that the discounts in the program did not incentivize hospitals
to change their practices. The Commission was unable to define any link
between increased spending and 340B incentives and suggested the reason
for higher spending appeared to be specific to the type of cancer.
Impact of Hospital-Employed Oncologists on Spending. Several commissioners (Kathy Buto, Lawrence Casalino,
Warner Thomas, and Vice Chair Paul Ginsburg) discussed whether there might
be an additional, unexamined impact on program spending with increased
employment of oncologists on hospital staff. Specifically, they wondered
if the 340B program could lead hospitals to hire more oncologists (with a
resulting increase in Medicare facility fees) and contribute to the shift
in cancer care from physician offices to hospital outpatient
departments. Jim Matthews, MedPAC Executive Director, agreed that
staff would examine the issue and raise it as a possibility in the March
report, but clearly stated that the Commission did not currently have any
data to support such a conclusion.
to the March Report.
Commissioner Warner Thomas
requested that staff include a note in the final report explaining that
the MedPAC study had no data about the severity of cancers included in the
analysis, and suggesting that increased spending could also be driven by
more severe cancers. Commissioner Bruce Pyenson requested a summary
section outlining the cash flow process for 340B hospitals compared to
non-340B hospitals. Finally, Commissioner Amol Navathe asked staff to
evaluate whether new 340B hospitals tended to engage in any consolidation activity
before they gained 340B status.
Covered entities are hopeful that the impartial
MedPAC study will put to rest previously publicized allegations that the 340B
program results in higher drug spending by 340B covered entities. Powers
will report on the final MedPAC report when it is released in March.