Too often government programs start with a noble goal but are soon denigrated by special interests groups who use well intentioned programs for their own gain. Unfortunately, this has happened with the 340B drug discount program. Due to limited oversight, bad actors have been able to profit from this federal program, abusing the system and hurting the exact people the program was intended to help. Created by Congress in 1992, the 340B drug discount program requires drug manufacturers to provide outpatient drugs to eligible entities that serve vulnerable or uninsured populations at steep discounts averaging 30 to 50 percent. Today, the 340B program has deteriorated into a huge profit center for hospitals in well-off communities and is not always helping the underserved as intended.
Many 340B hospitals have expanded their ability to profit off of the 340B program by buying or becoming affiliated with community-based physician practices in affluent areas. This is often seen with the purchase of community oncology practices. The 340B entity acquires the community oncology practice, is then allowed to purchase cancer drugs at the heavily discounted 340B price, diverts the discounted medicines to insured patients who are charged full price, and then collects the difference. This abuse has contributed to community oncology closures around the country and price increases due to care consolidation. Cancer patients now face higher costs, decreased convenience, and lower access to essential care as they are forced to receive treatment at hospital-owned settings instead of independent physician practices. This shift in site of care especially hurts the vulnerable and uninsured communities the 340B program was designed to serve, since transportation costs are often a barrier to medical care.
Within the 340B program, there are no explicit requirements on how participating hospitals and pharmacies use the revenue generated through the program – there are no requirements that the revenue be used to benefit patients. Because of limited accountability, evidence suggests hospitals and pharmacies charge insured and even some uninsured patients full price for 340B drugs, and pocket the difference between the discounted purchase price and the price charged to insurance companies. The HHS Office of the Inspector General noted that most 340B-eligible hospitals and pharmacies fail to pass on the 340B discounts they receive – even to uninsured patients.
There is a golden opportunity for Congress to return 340B to its noble original purpose: to help uninsured or vulnerable patients by providing safety net clinics and other facilities that serve a disproportionate share of uninsured or vulnerable patients with discounted medicines. The program should be modernized by limiting program participation to medical sites that actually serve vulnerable or uninsured populations and by clearly defining which patients are eligible.
The 340B program is important and should continue. It is critical that we prevent those who are supposed to benefit from these drug discounts – the poor, seniors and most disadvantaged – from being left out in the cold while many hospitals and pharmacies rake in huge profits. The time for Congress to act is now. Our patients, families, and communities deserve nothing less.