Patients Not Benefiting From Discounted Medicines as Intended

The phrase 340B may sound like some technical jargon far removed from your own personal health care. It’s a federal drug pricing program named for the section of the authorizing legislation that Congress passed in 1992 with broad, bipartisan support. 

Like some government programs, what starts as a positive can, over time, find itself wandering from its original intent. But what’s worse, in this case, the 340B program is failing that original intent: to benefit low-income patients. 

The 340B drug discount program was started to allow non-profit hospitals receiving federal funds to stretch scarce resources as far as possible, reaching more eligible patients and providing more services. The program requires pharmaceutical manufacturers to discount prescriptions for qualifying safety net hospitals, clinics, and other health care facilities that serve large populations of uninsured, low-income, or vulnerable patients. The intended goal was for those participating facilities to pass on those discounts to patients in the form of reduced-cost medicines and enhanced charitable care.

That’s a noble mission, to be sure. Patient access and lower costs are something we all can agree on when it comes to health care and prescription drugs.

And at least part of the program is working. Participants in the 340B program, some 50,000 non-profit hospitals and other providers nationally as of 2020, saved a collective $38 billion on drugs, according to data compiled by the University of Southern California. 

However, some 340B hospitals are now contracting with for-profit chain pharmacies, even though these “contract pharmacies” were not part of the program’s original plan enacted by Congress. In just the past four years, data shows a 1,006% increase in contract pharmacies and for-profit, pharmacy benefit manager (PBM)-owned specialty pharmacies tapping into the program. According to Berkeley Research Group, 340B-covered entities and their contract pharmacies will generate about $10 billion in profits in 2022, putting the program on pace to become the largest federal drug program by 2026.

Despite the savings and mounting profits, there is no evidence that the savings Congress intended are benefiting patients as more than half of the 340B hospitals reported that they don’t share discounts with patients at their contract pharmacies.

As the federal government worked to rein in the program and possible abuses by cutting reimbursement rates in 2018, the U.S. Supreme Court recently struck down the move. In the majority opinion in American Hospital Association, et. al. v. Becerra, penned by Justice Brett Kavanaugh, the court ruled that the Health and Human Services Department does not have the discretion to alter 340B reimbursement rates without gathering data on what hospitals pay for outpatient drugs. 

The lack of transparency and accountability in the program is clearly disturbing. Yet the high court’s decision sets up a continued windfall in excessive profits for some 340B hospitals, and it means patients continue to pick up the tab while drug manufacturers continue to provide discounted medicines. 

All of this should be viewed with alarm, a reason for leaders in Washington to reexamine the program. At a time when our health care system is already under duress from the pandemic and with continued concerns over closures of rural hospitals, we should make sure programs like 340B deliver on their original promise – making access to life-saving prescription drugs more affordable for those low-income and uninsured patients relying on Medicaid, Medicare and charity care for their health and medicines. 

Editor’s Note: The above guest column was penned by Victoria Ford, president and CEO of the Texas Healthcare & Bioscience Institute. The column appears in The Rio Grande Guardian International News Service with the permission of the author. Ford can be reached by email via [email protected].


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