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ICYMI: The Hill Op-Ed on Ending 340B Abuse

June 16, 2016
Writing in The Hill today, Ellen Weaver of the Palmetto Promise Institute and Lindsay Boyd of The Beacon Center of Tennessee call upon Congress to reform the 340B program, created by Congress more than two decades ago. The program aimed to help low-income and uninsured patients afford prescription medications. Qualified hospitals – originally, 90 truly charitable hospitals serving large at-risk populations – received large discounts on the medications they purchased. But, there was one loophole this law didn’t account for:
340B never actually specified that hospitals were required to pass on the discounts. Hospitals quickly realized they could buy drugs at a discount and then sell them to insured patients who are not poor at the full price, thereby pocketing the difference.

With the number of 340B hospitals nearly doubling between 2010 and 2014, 340B discounts skyrocketed from over $1 billion in drug sales in 1997 to $12 billion last year. Today, almost half of all U.S. hospitals are receiving 340B discounts, but with a profit to be made it’s no surprise what recent studies from the Berkeley Research Group found:
Most 340B hospitals don't actually serve large at-risk populations, and less than two-thirds of 340B hospitals notified patients of their eligibility for charity care.

It’s time to end this widespread abuse by hospitals seeking to fatten their bottom lines at the expense of the patients the program was intended to benefit. Savings from 340B were meant to provide better access for low-income patients, not be a general subsidy for hospitals.
The 340B drug discount program is a perfect example of what happens when a well-intentioned, but unaccountable, program creates the wrong incentives.

This all begs the question: if hospitals aren’t using the profits from the discounted drugs to provide greater care, then where exactly are these dollars going??
No one knows how much, if any, of the savings were passed on to patients, since hospitals aren't required to report that figure. Sadly, this lack of oversight provides a perverse incentive to pad profit margins at the expense of the poor.

Read the full op-ed here.