To the average Joe or Jane, the term “340B” might lead one to believe it’s the latest sleek Mazda model or an elevated seating section at Sacramento’s soon-to-open Golden One Arena. But for those in the health care world and the general public, the reality is that it takes on a whole new – and extremely significant – meaning: a vitally important prescription drug discount program for those in need.

For a quick historical primer, without losing you “in the weeds”, in 1992 Congress passed the 340B Drug Discount Program to help uninsured and indigent patients get the prescription medicines they needed but simply couldn’t afford. In effect, the new law required pharmaceutical manufacturers to provide significant discounts to medical clinics and qualifying hospitals as a condition of their drugs being covered by Medicaid.

Many clinics qualify for “340B” based on receiving certain federal grants – grants that typically require these clinics to use revenue from the program to improve services to the vulnerable patients they serve. However, hospitals and their satellite clinics, in turn, qualify based on a range of criteria that isn’t tied to obligations to reinvest resources into care for the uninsured, vulnerable patients.

Sadly, as is often the case with many well-intentioned government programs, just like Little Bo Peep and her beloved sheep, the 340B program has lost its way. Because of insufficient guidance and weak oversight, the program bears little resemblance to what Congress envisioned in the early 1990s, and there’s a tragic and inequitable cycle in play.

Here’s how that happened – and continues to happen:

So, the bottom line is that many hospitals that are supposed to be providing medicines for those who can’t afford them are also giving these vital pharmaceuticals – at discount – to those who can afford them…and billing insurance companies at the full rate…and keeping those discounts for themselves, with very little “charity care” for the intended patients.

There are no meaningful standards in place to determine if and how these hospitals are providing care to low-income patients, and the truth is that most 340B hospitals provide little to below average levels of charity care. And there’s also a lack of an appropriate definition of “patient”, and without a clear definition, it’s impossible for hospitals to determine if and when discounts are diverted to prescriptions that are ineligible because the patient doesn’t meet that definition.

Many other grantees, including local community clinics, are required to meet strict guidelines and requirements. A number of these hospitals and retail pharmacies simply aren’t held to that same standard, and as a result will often see the profit and benefit while the uninsured patient won’t see the benefit.

What does that mean to you and me, the small business, the average Joe or Jane?

Well, when fewer uninsured people are getting the quality care they need and deserve, we’ll ultimately see a drain and strain on other health care services and resources…and costs. Because those who truly need these discounts aren’t getting them, they most likely will use other public services that are costing you and me more in the long run. That doesn’t help the uninsured and indigent who need the help, it doesn’t help the physicians and health care specialists trying to provide quality care, and it most certainly doesn’t help us Californians and Americans on which government relies to fund the public sector.

What can we do to “turn up the volume to 11?”

Whatever one’s position may be about the Affordable Care Act, there’s no question that the majority of Americans believe everyone should have access to affordable health care. The 340B program was passed by Congress well before Obamacare was signed into law, but with the same good intentions and perspective – insuring the uninsured. We need to be sure we all know about this issue, but that we’re also educating our elected officials – what this means to our family, our community, our “mom and pop” store – when a meaningful program has gone awry. Congress can and should take important steps to steer this 340B ship straight, and they can do so. We can start by reaching out and educating those members of Congress who serve on the House Energy and Commerce Committee, which has jurisdiction over this 340B program, and that includes:

You can also find out much more about the 340B program, the problems we’re facing since it has “lost its way”, and what we can do to ensure our leaders are more focused on bringing it back to its original intent – helping those most in need – by checking out the website,

There is a place and a purpose for government to serve the people – but it’s up to us, the people, to ensure it’s on track and that we’re all getting the biggest bang for our buck.