Testing a Radical Idea: Giving Drug Discounts Directly to Patients (Plus the Beyond-Dispute Top 10 Stories of the Week)

I’m probably supposed to write about the full approval of Leqembi here at the top of the newsletter, but I have something far wonkier on my mind. It’s 340B, and if that makes your eyes glaze over (understandable!), the Top 10 list, including Leqembi, is just 400 words down the page. 

As a reminder, this LinkedIn missive has a sliver of the content that’s delivered every day in my email newsletter, which you can sign up for here. 

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The 340B is a federal program in which drugmakers, if they want to tap into Medicare and Medicaid markets, have to give discounts on medicines to a number of different kinds of “covered entities” -- from non-profit hospitals to rural medical centers to Ryan White clinics.

The program, now more than 30 years old, is designed to help low-income Americans. But, as with so many other pieces of the health care system, 340B has slowly morphed into a profit center for covered entities, who have found ways to profit from the discounted drugs, mostly by giving them to fully insured patients and being reimbursed at full price. 

Covered entities claim that these profits then get invested back in the community, but the evidence for that reinvestment happening remains pretty thin. 

The most logical way to get the 340B program back to its historic roots would simply be to pass along the discounts directly to the neediest patients, doing away with the whole convoluted insurance-company-arbitrage-followed-by-reinvestment-in-charity-care-maybe system. I mean, tens of billions of dollars are flowing into 340B. The least we can do is try to direct them to low-income Americans. 

That’s technically a thing that covered entities can do. IQVIA published a great white paper last year that detailed how “340B cards” could work to lower out-of-pocket costs directly, lamenting that only 1.4% of 340B claims were handled in a way that delivered savings right to the patient. 

This week saw the publication of a compelling study out of a small health system in Kansas that created a 340B fueled program that got patients with COPD cheap inhalers. Turns out, that was a great move for everyone. Patients spent a ton less on their medicine, and the system saved even more because those patients stayed the heck out of the ER. It was a textbook win-win. 

It sure seems like a great model for a 340B approach. It probably won’t spur copycats, because America, but I’d sure love to see the idea catch on.

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The Beyond-Dispute, Rank-Ordered Top 10 Value/Access Stories of the Past Week:

1. Leqembi was fully approved by the FDA … and must now be reimbursed by Medicare. I’m officially on the record that this medicine isn’t going to swamp Medicare budgets, but it is a dry run for the great health economics debate of the next decade: what do we do with breakthroughs that nonetheless have budget impacts. 
2. Consumer Reports offers a fantastic guide to lowering out-of-pocket drug costs. The reality is that there are a lot of safety nets in this country designed to ensure that drug costs aren’t a burden, but the big problem is that most people don’t even know those safety nets exist (or how to use them). So this CR piece is a great resource. 
3. “White bagging” gets a deeper look. KFF Health News examined the inherent conflicts in white bagging, the insurance-company practice of sending doctors infused medicines to use, rather than letter doctors use their “buy and bill” stock. Insurance companies say it’s a countermeasure against increasingly absurd provider markups. Providers say it interferes with care. 
4. Industry is pretty ticked at ICER’s proposed 2024 value framework. Endpoints has a nice wrap here, and my thoughts are here. 
5. PhRMA is ticked about the impact of Biden policies on cancer development. CEO Steve Ubl has an op-ed in STAT arguing that, rather than a war on cancer, the administration is waging a war on cures, citing a lack of commitment to IP rules, the IRA and baby steps toward linking accelerated approval and reimbursement. 
6. Something is happening in China. For years, pharma companies have been pinched by the reality of operating in China, where entrants must give up all but the slimmest of margins to get access to the world’s second-biggest drug market. But, this week, government officials told pharma companies that "more development opportunities" are coming. What does that mean? 🤷
7. IRA is going to lower OOP costs. It gets lost in all of the (necessary! appropriate!) kerfuffle about price controls, but the $2,000 out-of-pocket cap in Part D is going to save seniors a collective $7.4 billion in OOP costs in 2025, according to HHS. And a new paper looks at how that dynamic plays out for prostate cancer patients. 
8. Prior auth sucks. That’s not news, but kudos to Medscape for continuing to document the way it sucks. (In short: So hard, so bad, and wicked bad.) 
9. We’re not done with the Humira story, not by a long shot. This piece in Biosimilars Review and Report has a great chart laying out where all the competitors stand on price. 
10. The PBM ad wars are heating up. ngl: I’m having a hard time getting into these wars of words, divorced from the policy implications. But STAT breaks down who is spending money (the anti-PBM forces seem to be winning, by that metric) and Fox has details on a new entrant in the battle (the Coalition Against Government Waste, coming in on the PBM side.)