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Trump administration won't overhaul 340B program, providers to keep drug subsidies

Providers gain an estimated $4.5 billion in savings each year from the drug industry subsidy.

Susan Morse, Senior Editor

Providers will get to keep the big pharma subsidies from the 340B drug discount program, at least for now.

The Trump administration has withdrawn the overhaul of the 340B program that was introduced in mega guidance by the Obama administration last year. The guidance restricted the definition of patients who were eligible to receive the discounted drugs and the drugs subject to the discounts.

"The guidance was dealing with patient and hospital eligibility," said Randy Barrett, spokesman for the trade organization 340B Health. "We saw a draft version early last year. It was negative for hospitals. It had restrictions for when they could use a 340B drug."

New Health and Human Services Secretary Tom Price, a physician, appears to support the current 340B drug program, according to Barrett.

"Price has been supportive of providers in the program," Barrett said. "We're hopeful he's keeping the program as is."

[Also: Drug companies will face $5,000 fines for 340B drug overcharges, HHS says]

Under existing rules that have been kept in place, the drug industry is required to discount drugs to providers that treat high numbers of needy patients or are rural based.

Hospitals buy about 80 percent of 340B drugs.

Hospitals and other providers can either pass along the discount or sell the drug to the insured patient at the regular price and keep the difference to help offset uncompensated care.

"That's what it was intended to do all along," Barrett said. "It was created to help nonprofit and public hospitals treat poor folks."

The 340B spend is about $12 billion a year, representing 2.6 percent of the overall retail American drug spend, according to Barrett.

Providers gain an estimated $4.5 billion in savings each year from the drug industry subsidy.

"That's the money pharma wants back," Barrett said. "That's the fight going on here. Now pharma is looking to Capitol Hill. It's a very tough fight because big pharma has lobbyists on Capitol Hill and gives millions to office holders. Pharma has a very strong group of supporters in Congress."

[Also: 'Mega-guidance' proposal puts big limits on 340B Drug discounts]

340B Health and other provider groups are watching to see if Congress will introduce a bill or put provisions within another piece of healthcare legislation to shrink the program.

The 340B drug discount program was created in 1992 to provide outpatient drugs to eligible providers at significantly reduced prices.

Obamacare added about 1,100 rural hospitals into the program.

"A lot of them depend on 340B income to keep their doors open," Barrett said.

Last year, after Health and Human Services released mega-guidance to overhaul the program, the federal government received about 800 letters from hospitals protesting the move. HHS issued no final guidance.

Twitter: @SusanJMorse