Working Paper 340B Drug Pricing Program

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340B Drug Pricing Program: Results of a Survey of Participating Hospitals

May 2007

A new Working Paper from the North Carolina Rural Health Research and Policy Analysis Center at the University of North Carolina at Chapel Hill and the NORC Walsh Center for Rural Health Analysis presents the results of a 2006 survey of pharmacy directors at rural hospitals currently buying discounted outpatient drugs through the 340B program. The purpose of this study was to understand the perspectives of pharmacy directors at participating hospitals on the 340B program in general, the financial impact of the program, and which specific program features presented barriers to its broader implementation.

* The working paper is available at

http://www.shepscenter.unc.edu/research_programs/rural_program/WP90.pdf

The 340B Drug Pricing Program enables certain types of safety net organizations to obtain deeply discounted medications, at prices below the "best price" typically offered to Medicaid agencies. In the past, few rural hospitals qualified for the 340B program, but the 2003 Medicare Modernization Act has revised eligibility criteria, thereby allowing many rural hospitals to participate. This report presents the results of a 2006 survey that was mailed to the pharmacy directors of 150 rural hospitals identified as participating in the 340B program. The goal of the study was to ascertain the financial impact of the program and determine which specific program features presented barriers to its broader implementation. In addition, to determine if there are differences in the characteristics between eligible rural participating and non-participating hospitals, selected results are compared to those from a separate companion survey of pharmacy directors at hospitals that were eligible but not participating in the 340B program.

Results from the survey show that there are substantial differences between participating and non-participating hospitals in terms of revenue and services offered. Participation rates increase directly with annual revenue: the proportion of hospitals participating is twice as high among

hospitals with over $100 million in annual revenue as in those with less then $50 million of revenue each year. Participating hospitals also provide a much higher volume of the types of outpatient services-ambulatory surgery, emergency departments, primary care clinics, and home health care--where the ability to offer reduced price drugs might be advantageous. The biggest challenge in administering the program cited by pharmacy directors was maintaining separate records for inpatient and outpatient drugs, and one-third of respondents stated that this remains a challenge for them. For those who have encountered significant problems in administering the program, there may be untapped resources available, and additional efforts are needed to ensure that eligible entities are aware of the many free services pertaining to the 340B program.