Iowa cancer bills also tied to hospitals abusing drug law

My Aug. 4 guest column in the Register, 'The hospital-clinic billing disparity is a scourge. Fix it,' tells only part of the story of why the University of Iowa Health Care bought Des Moines' Mission Cancer + Blood independent oncology clinic and paid such a high price to its doctors. My piece covered how UI Health adds 'facility fees' to the patients' bills that were previously included in the physician charge. An additional reason UI Health Care was willing to pay such a premium for Mission Cancer has to do with a drug pricing law, the 340B Drug Pricing Program. The public knows little about it, but it affects their drugs cost very much ― directly or indirectly. UIHC stands to profit greatly from this program through its purchase of Mission Cancer, which uses very expensive drugs. Originally created in 1992, the 340B program requires pharmaceutical companies to provide steep discounts on outpatient drugs to 'covered entities' (like safety net hospitals and community clinics) to help them stretch federal resources. The savings were meant to reduce the costs of some wildly expensive drugs, such as cancer drugs, and for the savings to be passed onto patients. More: The hospital-clinic billing disparity is a scourge. Fix it. | Opinion As a former congressman involved in healthcare legislation, I am reminded of two truths. The first is that 'the road to hell is paved with good intentions,' meaning that good intentions can cause bad results without smart planning and knowledgeable implementation. The second is the observation by Alexis de Tocqueville in "Democracy in America" that the great advantage of American democracy consists in being able to fix the many flawed bills and their unintended consequences that Congress enacts. A broad consensus of lawmakers, regulators and industry analysts agree that the 340B program has outgrown its original intent and needs systemic reform. Tocqueville would say it is time to 'modify' the 1992 340B Drug Pricing Program, especially after it was expanded by the Affordable Care Act (Obamacare), allowing financial behemoths like UIHC to participate. 340B was originally designed as a safety-net program and covered about 50 hospitals and clinics treating low-income patients. It has grown into a highly profitable, opaque revenue generator for hundreds of wealthy hospital systems and corporate pharmacies with little evidence that the financial savings are being directly passed on to vulnerable patients. The big problem with the law is that hospitals can buy drugs at a deep discount and then bill insurers or patients the standard reimbursement rates while pocketing the difference. Major critiques of 340B in the New England Journal of Medicine and JAMA find no conclusive evidence that large hospitals reinvest these massive profits into safety-net or low-income communities. More: Obamacare hasn't worked. Discarded ideas need a new look. | Opinion The 340B program has expanded into a $80 billion marketplace and covers half of all U.S. hospitals. The hospitals can use the 340B revenue to buy up physician practices like Mission and build specialized infusion centers in wealthy suburban neighborhoods — where patients already have high-paying commercial insurance — rather than expand care in under-served rural or low-income urban neighborhoods. Compounding the problem, in 2010 the hospitals were allowed to use 'contract pharmacies,' which allowed for-profit pharmacy benefit managers (PBMs) and retail chains to take a percentage of the 340B discounts, further shifting the program's benefits away from patients. Federal law prohibits manufacturers from paying a 340B discount and a Medicaid rebate on the same drug. However, the tracking systems are so opaque that they often pay duplicate discounts. These costs are then passed on in the form of increased premiums to those who get their insurance from employer plans, which cover the majority of Americans. In a sense, the 340B Program is a tax on Americans not covered by Medicare and Medicaid. Finally, the government agency that oversees 340B is limited in its statutory authority to regulate how hospitals spend their savings and to audit compliance. This weakness in the law has led to many lawsuits between drug makers, healthcare groups and the federal government. The American Hospital Association says that hospitals operate on thin margins and that the profit they make from 340B helps keep emergency rooms, trauma centers and rural clinics open. Critics of 340B in Iowa would say that charity care in Iowa hospitals accounted for just 0.9% of total operating costs at Iowa's 340B hospitals from 2014 to 2022 while these hospitals saw assets increase by 17% and charity care decreased by 17%, as the Pharmaceutical Research and Manufacturers of America reported. Congress needs to modify 340B by amending the law in three ways. First, it needs to make sure that only safety-net hospitals get the discount, which means they must provide meaningful charity care. Second, there are currently zero requirements for how hospitals use the 340B discounts to help patients afford their drugs; specific requirements should be enacted. Third, 340B should establish a government clearing house on claims data with rebates for legitimate discounts. Also, this federal program should be governed exclusively by the federal government to prevent states gaming this benefit. The growth of 340B has led to debate over the original congressional intent caused by a lack of detail and clarity in the program's intended mechanics and objectives. Stakeholders project their own assumptions onto the program's intent. Many saw it originally as a way to ensure low-cost medications for under or uninsured patients. The hospitals see it now as an unrestricted subsidy. Had Congress wrote a more clear law on this important point in the first place, Mission Cancer might have remained a private oncology practice and saved its patients a lot of money.' Dr. Greg Ganske is a retired reconstructive surgeon who cared for women with breast cancer, children with birth defects, farmers with hand injuries, trauma and burn patients. He served Iowa in the U.S. Congress from 1995 to 2003.