NJ Spotlight News: Low-income patients deserve far better from controversial drug program

By Jeanette Hoffman, Patients Come First New Jersey’s Executive Director

A little-known, controversial federal drug program named the 340B Drug Pricing Program is making national headlines for its impact on raising prescription drug prices on the vulnerable patients it was intended to benefit. New Jersey patients should be on alert, as this massive drug program is used by a number of hospitals in our communities, and consumers could be paying more as a result.

A recent New York Times article  detailed how the 340B drug program — originally intended to provide affordable drugs to covered entities, such as safety-net hospitals —  is being exploited by many large, nonprofit health systems, including some in New Jersey.

In fact, at least 26 Garden State hospitals participate in this safety-net drug program, yet 16% of New Jersey 340B hospitals provide below the national average for charity care. And data shows that New Jersey 340B hospitals earn 1.4 times more in 340B profits than they actually spend on charity care. For example, Atlanticare Health System, which includes Atlanticare Regional Medical Center, earns annual profits of $49 million from the 340B program.

While the name “340B” may be largely unfamiliar to most New Jerseyans, the program is the second-largest prescription drug program administered by the federal government —larger than Medicare Part D, Part B, or Medicaid. Since 2010, the program has grown by almost 500%, with over 25,000 contract pharmacies now estimated to participate in it. The lack of requirements for how 340B hospitals use these discounts has allowed this program to fly under the radar and grow exponentially.

Due to the program’s lack of transparency and oversight, large players in the health care system take advantage of 340B without passing the savings along to the patients. Worse, they charge vulnerable patients even more for their medicines.

The New York Times recently reported a shocking account of a metastatic breast cancer patient, Virginia King, who unknowingly received care from a cancer center enrolled in the safety-net 340B program. According to the Times, even though the patient’s prescribed cancer treatment had a list price of about $2,700, the hospital billed her insurance company almost 10 times that amount, at $22,700. Her insurer paid $10,000, but the hospital demanded an additional $2,500 from the patient. Hospitals should be focused on protecting patients, not exploiting them financially.

According to a study by the New England Journal of Medicine, there’s little to no evidence that any financial relief from this program ends up in patients’ hands, concluding that “financial gains for hospitals have not been associated with clear evidence of expanded care or lower mortality among low-income patients.” Based on Virginia King’s experience, this seems to be the case for most hospitals involved in the 340B program. Yet, there are plenty of examples of hospitals using the profits to improve their facilities or invest in unrelated programs.

With so much evidence that many patients never see the benefits of 340B and that it drives up costs, this program needs serious reforms to ensure patients come first. Recent efforts to instill transparency in the system, including shifting to rebates rather than discounts, would move toward the accountability necessary to ultimately ensure providers can only receive discounts if they prove patients receive the benefits of lower-cost drugs. This appears to be a step in the right direction and should be considered by New Jersey lawmakers looking to reform the 340B program to help those low-income patients who need it most.

Read the full op-ed in NJ Spotlight News.