A group of cancer doctors is considering its next legal step in a case that sheds more light on the 340B government drug program created to help the needy.
In September, Jefferson-Health Northeast (Jefferson) revoked the hospital practice privileges of physicians with Alliance Cancer Specialists (Alliance). Jefferson is one of the largest hospital systems, and Alliance is the largest oncology and hematology practice, in the Philadelphia area. Alliance sued and lost.
“We are in a transition point,” said Moshe Chasky, M.D., an oncologist with Alliance. “I don’t want to give up because, at the end of the day, we want to be able to see our patients in consultation when they’re admitted into the hospital.”
Taking Oncology In-House
Jefferson says it had entered into an exclusive agreement with its own medical group to provide inpatient and outpatient oncology and hematology services, Medscape reported on November 1.
But Alliance doctors should have access to their patients, says Chasky.
“Our intent is not to take away any ‘new’ hospital consults,” said Chasky. “Shouldn’t the patient be at the epicenter of what we are talking about? This clearly leads to inferior patient care when we are not involved (with) our own patients.”
Independent oncology groups nationwide are watching the case closely for fear they, too, could lose their admitting privileges, Medscape reported.
Discounted Drugs
Alliance claims Section 340B of the 1992 Public Health Service Act was a factor in Jefferson’s motivation to revoke its physicians’ privileges.
The federal law requires pharmaceutical manufacturers participating in Medicaid to sell outpatient drugs at discounted prices to organizations that care for many uninsured and low-income patients.
“The 340B program enables covered entities to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services,” states the Health Resources and Services Administration (HRSA) on its website.
Program’s Mission Creep
The Pharmaceutical Research and Manufacturers of America (PhRMA), a drug industry trade group, is critical of the 340B drug program.
“Since 1992, manufacturers have provided billions of dollars in steep discounts on out-patient medicines to safety-net clinics and qualifying hospitals expecting that those entities would use the savings to ensure that vulnerable patients have access to needed medicines,” PhRMA states on its website. “But the 340B program has strayed from its original purpose.”
“Instead, it has become less about patients and more about boosting the bottom lines of hospitals and for-profit pharmacies,” states PhRMA. “How? Large hospitals buy deeply discounted 340B medicines and then turn around and charge uninsured patients and insurance companies higher prices, pocketing the difference with little or no evidence they use that money to help patients.”
Oncology drugs and the newer gene and cell therapies are some of the priciest drugs on the market. “(The loss of our privileges) is really about 340B because they never did this for endocrinology or infectious disease,” said Chasky. “It was directed specifically to cancer oncology.”
Antitrust Violations Alleged
Alliance physicians had admitting privileges at Jefferson’s hospitals for years. In its lawsuit, Alliance claims the hospital system is trying to create a monopoly in oncology and hematology services in the Philadelphia area.
In a court filing, Jefferson said its action was in “the best interest of patients, as it would ensure better integration and availability of care and help ensure that Jefferson consistently provides high-quality medical care in accordance with evidence-based standards.”
In a September 18 ruling, U.S. District Judge Kai Scott rejected Alliance’s argument that the revocation of admitting privileges violated federal antitrust laws and inflicted irreparable harm on the group. Scott said she would consider another motion if Alliance could present stronger arguments on Jefferson’s antitrust violations and on the irreparable harm resulting from Jefferson’s actions, noted Medscape.
“Jefferson did compromise on allowing us privileges as internists, but not as oncologists, which means they will not consult with us on our own patients,” said Chasky. “Basically, the hospital is prohibiting us from writing a note in a patient’s chart.”
Law’s ‘Domino Effect’
Jeff Stier, a senior fellow at the Consumer Choice Center, says the drug discounts have been abused.
“The 340B program artificially—if not deceptively—lowers the price of medicines for certain entities,” said Stier. “So, it should come as no surprise that these entities would do everything they can to capitalize on that advantage by expanding their practice, even at the expense of non-qualified entities—and their patients. This saga illustrates the reality that, if left unchecked, the domino effect of one market-distorting act can continue for decades.”
Hospitals Acquire Practices
Merrill Matthews, Ph.D., a resident scholar at the Institute for Policy Innovation, says the underlying issue in this case may be the ongoing consolidation of health care imposed by hospital systems, rather than the 340B program.
“Hospital systems have been buying up independent physician practices for years,” said Matthews. “But the Affordable Care Act (Obamacare) exacerbated the trend. In 2012, 29 percent of physicians worked for a hospital or in a practice partially owned by a hospital, according to the AMA (American Medical Association). By 2022, that number had increased to 39 percent.”
Consolidation raises red flags, says Matthews.
“Hospitals always claim that relationship allows them to provide better, more integrated care, thus justifying excluding outside practices,” said Matthews. “But there is a suspicion that it’s just a way to cut costs by forcing physician-employees to follow hospital guidelines. Ironically, some studies indicate that the takeover of physicians’ practices reduces competition and increases costs.”
Bonner Russell Cohen, Ph.D. (bcohen@nationalcenter.org) is a senior fellow at the National Center for Public Policy Research.
