Usually when you hear or read about the 340B drug discount program, it’s technical policy-speak — talking about arcane laws from back in the day and throwing around acronyms no one knows or understands.
But it’s important not to lose sight of the idea at the core of the program: It was created in 1992 with bipartisan support, requiring pharmaceutical manufacturers to discount prescriptions for hospitals and clinics that largely serve uninsured or low-income patients.
Imagine a prescription usually costs $100, but the hospital or clinic only pays $50 for it, with the expectation that they would use the savings to expand access to care and provide treatments and medicines to patients in need.
However, recent evidence demonstrates many participating providers, particularly large hospital systems, are taking advantage of the 340B program for their own profit, not for patients’ health.
Several studies show that while hospitals’ revenue has increased in recent years, their charity care has decreased. One study revealed that of the top U.S. hospitals, half of which participate in 340B, charity care dropped 35 percent over recent years. Instead of going to charity care, the savings are going to profits; Over the same years, the revenue flowing to these hospitals increased by $4.5 billion. Another study that looked specifically at 340B “disproportionate share hospitals” found that more than a third of them provide charity care that represents less than 1 percent of total patient costs.
So what are these hospitals doing with the millions in savings from the 340B drug discount program? Neither the public nor the government knows. Despite being the biggest, most prevalent and most profitable participants in the 340B program, Disproportionate Share Hospitals have very limited oversight and accountability. They are not required to report how much money they make from selling 340B drugs nor to show how they use the savings for safety-net or charity care.
With the realization of how profitable the 340B program is, Disproportionate Share Hospitals are also figuring out how to use it to pad their bottom lines even further — by buying up smaller practices. Because of this, the 340B drug discount program may displace non-340B providers, cutting off patient access to critical local community providers, such as community pharmacies and independent oncologists, and driving care to more costly treatment settings.
Corporate health care conglomerates are playing the 340B program for all it’s worth, taking the benefits meant for care and medicines for vulnerable patients and keeping them for themselves.
New legislation aims to fix that.
The 340B Protecting Access for the Underserved and Safety-Net Entities Act (340B PAUSE Act), would increase the oversight and accountability of how 340B funds are used and also place a temporary freeze on new hospitals being designated as disproportionate share hospitals. This bill will help return 340B to its original intent of creating better health outcomes for the neediest patient populations. Until the abuses from these disproportionate share hospital participants are resolved, the 340B drug discount program should be solely focused on the providers and patients that are delivering on its original, core idea.
This legislation is exactly what we need from Congress — common sense, bipartisan and level-headed fixes for solvable problems. Enough is enough. I support the 340B PAUSE Act so that the program can get back on track in truly helping safety-net providers expand access to care and medicine for those in need in our communities.
— BJ Cavnor is the executive director of One in Four Chronic Health, a Portland-based nonprofit.