Medicare 340B Program May Be Reducing Biosimilar Uptake

A version of this article was originally published on AJMC.com, the sister site of The Center for Biosimiars®. This version has been lightly edited.

The 340B program has driven provider variation in the uptake of biosimilars and may meaningfully reduce overall biosimilar use in the United States, according to research published in Health Affairs.¹

The researchers investigated the 340B Drug Pricing Program’s impact on biosimilar uptake in hospital outpatient departments based on use of filgrastim (originator, Neupogen; biosimilars, filgrastim-sndz and filgrastim-aafi) and infliximab (originator, Remicade; biosimilars, infliximab-dyyb and infliximab-abda), which were the first 2 biologics with biosimilar launches via the Biologics Price Competition and Innovation Act. They studied 2017 to 2019.

Hospitals in the 340B program receive discounts on manufacturer’s average sales price, but Medicare reimburses them at the same rate as non-340B hospitals. The purpose is for hospitals in the program to use the savings for resources for their low-income populations. Eligibility for the program is based on disproportionate share hospital (DSH) percentage, which is a formula accounting for the share of the hospital’s low-income patients, urban and rural classification, and the number of beds. When DSH percentage exceeds 11.75%, hospitals become eligible for the 340B program.

“With 340B program discounts, reference products could be relatively more profitable than biosimilars,” the authors explained.

The 340B program has been controversial, with critics highlighting the lack of transparency around where those drug discounts go.² The New York Times reported on how Bon Secours Mercy Health used the 340B program to turn a profit by opening satellite clinics in wealthy neighborhoods.³

The authors of the current study looked at 55,970 administrations for 6306 patients across 593 general acute hospitals.

The majority of hospitals were teaching hospitals (52.1%) and were in urban areas (94.9%). The majority of patients were White (83.7%). For patients taking filgrastim, the most common indication was nonmyeloid malignancy and chemotherapy (76.6%) followed by neutropenia (45.0%). For patients taking infliximab, the most common indication was rheumatoid arthritis (51.0%) followed by Crohn disease (29.2%).

Using a regression discontinuity design to examine the impact of the 340B program on biosimilar administration, the researchers found substantial discontinuities in biosimilar use among hospitals just above the threshold compared with those just below it.

“Relative to biosimilar use just below the threshold, the discontinuity estimate implies a 66 percent reduction in biosimilar use associated with 340B eligibility,” according to the authors.

They wrote that the study shows the 340B program may cause providers to favor drugs with higher Medicare reimbursement; however, they noted that other factors may have led to the estimated effects.

One proposal to incentivize use of biosimilars would be to consolidate billing codes to biosimilars are reimbursed at the same rate as the reference product, which would make the lowest-cost product (ie, the biosimilar) the most profitable to prescribe.

“Our results suggest that hospitals do respond to financial incentives and that this type of payment change may more effectively encourage the use of lower-price biosimilar medications,” they explained.

A 2022 white paper⁴ from the Community Oncology Alliance similarly found that 340B hospitals are slow to adopt lower-cost biosimilars, with a quarter (26%) of hospitals examined listing prices for only the reference product and not its biosimilars. In addition, only 10 hospitals evaluated carried all of the biosimilars studied.

References

1. Bond AM, Dean EB, Desai SM. The role of financial incentives in biosimilar uptake In Medicare: evidence from the 340B program. Health Aff (Millwood). 2023;42(5):632-641. doi:10.1377/hlthaff.2022.00812

2. Steinzor P. Nicolas Ferreyros: there is growing recognition the 340B program is “out of control.” The American Journal of Managed Care. March 22, 2023. Accessed June 1, 2023. https://www.ajmc.com/view/nicolas-ferreyros-there-is-growing-recognition-the-340b-program-is-out-of-control-shares-his-thoughts-on-the-340b-drug-pricing-program

3. Thomas K, Silver-Greenberg J. How a hospital chain used a poor neighborhood to turn huge profits. New York Times. September 24, 2022. Accessed June 1, 2023. https://www.nytimes.com/2022/09/24/health/bon-secours-mercy-health-profit-poor-neighborhood.html

4. Examining 340B hospital price transparency, drug profits, and incentives. Community Oncology Alliance. September 2022. Accessed June 1, 2023. https://communityoncology.org/wp-content/uploads/2022/09/COA_340B_hospital_transparency_report_2_final.pdf