Are you serious???
I don’t usually get fired up about stuff that goes on in our legislature, but when you hear crazy statements that are clearly aimed at finding a loop hole in the 340b legislation, it makes me mad! Here’s the skinny:
A few weeks ago, President Obama made an executive order on drug shortages. One of the reasons for the shortage that was given by pharmaceutical manufacturers was the 340b program. There were some other more valid reasons including “low reimbursement for mature generic injectable drugs reduces the incentive to manufacture them.” This week, we found out that a Utah Senator, Orrin Hatch, (along with Senators Grassley and Upton) is drafting legislation that would halt 340b pricing for drugs that are in short supply for up to three years.
First, as a hospital pharmacy director (with responsibility for a retail pharmacy as well) the majority of drug shortages are for inpatient drugs. Most are critical care injectables and items we need to make TPNs. Since the 340b program primarily applies to outpatient drugs or drug administered to treat outpatients, I do not see how the 340b program has contributed to these inpatient drug shortages.
Second, for the outpatient drugs that are short, it is possible that the 340B program decreased profitability, which would cause manufacturers to stop making the drug. However, 340b purchases are still a very small percent of the market and this alone would not be enough to stop a manufacturer from making a drug. My system pharmacy contract manager made the point that the reimbursement structure is what contributes to this. GPO and IDNs have driven the price down so low (in an effort to keep costs down to consumers) that it is not profitable to continue making the product. If we could change the model to take into account expected manufacturing cost plus a margin to guarantee drug companies some profit in the generic market, we may see more stay in the market.
Third, and most scary. If you are a publicly owned pharmaceutical company and you need to increase profits. What is to stop you from artificially causing your drug product to go into shortage, which would place a hold on 340B pricing (and Medicaid rebates) for up to three years. Ultimately resulting in a nice profit increase for your shareholders, a bonus for you, and completely skirting around legislation created to help hospitals and clinics taking care of our citizens with the most need.
To summarize all of this, to create legislation to place a hold on the 340b program and Medicaid rebates based on the premise that it will help with drug shortages is off target at minimum and potentially disastrous for hospitals and clinics relying on 340b help to stay solvent. If this legislation goes through, I have no reason to believe that drug companies are going to do everything they can to prevent a shortage, rather they will potentially allow shortages to happen as the result will be more profit. Senator Hatch, don’t do it. If the statements above are not enough, then you have to know that this will be seen as a Big PhRMA pocket lining, that will be pointed out by any of your opponents (I am sure it will not escape the watchful eyes of the Tea Party).