The following is a sponsored article from PhRMA.
Imagine you end up in the emergency room at a nearby hospital and they send you home with a prescription for you to fill at their contract pharmacy. If the hospital and their contract pharmacy participate in the little-known federal 340B program, the hospital may pay as little as a penny for that medicine but mark it up thousands of dollars.
340B hospitals abuse the program and take advantage of the program’s lack of oversight and transparency, boosting their profits at the expense of patients.
How did we get here?
The little-known federal 340B program, established in 1992, originally set out to help hospitals and clinics provide affordable medicine to low-income and uninsured patients in vulnerable communities. However, there are no requirements mandating that hospitals pass these savings on to patients, and there is no oversight ensuring the money generated from the program is used to expand access to care.
Where is the money going?
340B providers and for-profit companies now collect 18 times more in profit from the program than they did a decade ago. In fact, big, tax-exempt hospitals, clinics, and their for-profit partners have a revenue stream of nearly $65 billion from the program, with no evidence that patients are benefiting. The 340B program is one of the top drivers of medicine spending. The program is so large it surpasses Medicare Part B and Medicaid, and is closing in on surpassing Medicare Part D.
340B has become less about patients and more about the hospitals’ bottom line.
The winners in this system are large hospitals, pharmacy benefit managers (PBMs), private equity-backed companies, and major pharmacy chains. They all reap the benefits of inflated drug reimbursements. Meanwhile patients, taxpayers, and employers pay the hidden tax created by these inflated drug costs.
According to recent analysis from Milliman, 340B hospitals consistently have higher drug costs per outpatient than non-340B hospitals. Average outpatient pharmacy spending for patients with commercial insurance is almost 200 percent higher at 340B hospitals compared to non-340B hospitals. Translation: 340B hospitals prescribe more, and more expensive, medicines.
No oversight, no transparency
The 340B program lacks guardrails for how 340B profits can be used and there is no oversight or transparency of where the money is going. While the federal government audits some 340B covered entities to detect misuse of the program, a new analysis by ADVI found that 99.7 percent of 340B providers escape scrutiny due to lack of oversight, and even then the majority of these program audits reported adverse findings, raising alarm bells.
The lack of oversight enables large, wealthy hospitals and chain pharmacies to exploit the program for profit, at the expense of patients.
Here’s what Congress can do to fix 340B:
- Ensure benefits reach patients
- Confirm true safety-net participation
- Strengthen transparency and oversight measures
Holding hospitals and clinics accountable
When hospitals have free rein to mark up medicines, everyone pays the price. It’s time for transparency and oversight to stop this greedy behavior.
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