By Kyle Keeney

Are hospitals fueling drug spending as they buy up oncology practices? This important question is the focus of a recent Modern Healthcare article. A new analysis of private insurance claims indicates that the answer is yes.

What is missing from the article is context around why so many oncology practices are being bought out by hospitals in the first place. The federal 340B drug pricing program is one of the primary drivers behind this industry-wide shift.

Under 340B, drug manufacturers are required to provide outpatient medicines to eligible health care facilities at significantly discounted rates. Hospital systems can participate in the program, while oncology practices cannot.

Access to 340B gives hospitals a critical advantage over the independent and community-based oncology practices that have no choice but to pay market prices for the prescription medicines their patients need to survive.

The cost-savings and profits that hospitals reap from 340B come at the expense of cash-strapped oncology practices, which are increasingly being forced to shut their doors or be bought out by large hospital systems.

This is not to say that we should throw out 340B. It serves an important purpose, and has helped many patients access the medications they need to be healthy. But the negative impacts it is having on oncology practices and the cost of health care nationwide warrant a closer look at the program.

Kyle Keeney is executive director of the Kentucky Life Sciences Council.