Mitali Desai•Director of Pharmacy Business Services, UMass Memorial Medical Center
Executive Summary
The Inflation Reduction Act (IRA) will significantly impact 340B hospitals by establishing a 'maximum fair price' (MFP) for certain Medicare drugs, which will eliminate the savings spread hospitals currently realize on these drugs for Medicare patients.
UMass Memorial Medical Center modeled the IRA's impact and projects an annualized negative financial impact of $3.5 million from just the first 10 drugs, a figure expected to grow as more drugs are added to the negotiation list.
The IRA will also lower the 340B ceiling price by making the MFP the new 'best price', which could increase savings for drugs dispensed to commercially insured patients, partially offsetting the losses from Medicare.
Ongoing manufacturer restrictions on 340B pricing at contract pharmacies complicate financial projections, though some states are passing laws to counteract these restrictions, leading to legal challenges.
12 quotes
Concerns Raised
The IRA's price negotiation will eliminate the 340B savings spread for Medicare patients, causing a significant negative financial impact on hospitals.
The negative financial impact is projected to increase annually as more drugs are added to the negotiation list.
Ongoing manufacturer restrictions on contract pharmacies are already limiting access to 340B savings and complicate future financial planning.
The loss of 340B savings could strain hospitals' ability to provide uncompensated care and other community benefits.
Opportunities Identified
The IRA's 'maximum fair price' will become the new 'best price', lowering the 340B ceiling price and increasing savings for drugs dispensed to non-Medicare patients.
State laws in Arkansas and Louisiana are successfully pushing back against manufacturer restrictions, potentially creating a model for other states to follow.