RealClear Health: The Fatal Flaw in the 340B Program That’s Hurting Vulnerable Americans
By Kasia Mulligan, Patients Come First’s National Spokesperson
The 340B program is a wolf in sheep’s clothing. Despite being a safety net program designed to help lower-income patients access medications, 340B has become one of the most blatant abuses of a governmental program to date.
New evidence shows how hospitals are taking advantage of the program’s lack of transparency. A recent New York Times article highlighted a troubling story of a 340B hospital charging a metastatic breast cancer patient’s insurance company $22,700 for a medication with a list price of $2,700. While the insurer covered $10,000, the patient, Virginia King, was left with a $2,500 bill, which she claimed was more than half of her monthly salary.
It's disturbing that the insurer was billed 740% of the actual cost of the drug and even more troubling that the hospital, as a 340B participant, expected Mrs. King to pay even more out of her own pocket to further pad their profits. Thankfully, Mrs. King found a non-340B treatment center with no out-of-pocket costs; however, with more than half of nonprofit hospitals now participating in the drug “discount” program, many patients will be out of luck trying to find a more affordable alternative.
The role of a hospital is to save lives and help those who are ill—not to profit off those vulnerable patients, many of which are Medicaid recipients. So, how did we get here?
The 340B program has a fatal flaw—providers are not required to pass the drug discount savings they receive from manufacturers along to patients. Some of these patients who are being targeted need this medication to live their lives with one or more chronic diseases, or, like Mrs. King, aid in cancer treatment. While the program was relatively small—and well-intentioned—when it was created more than three decades ago to support hospitals in their treatment of poor patients, its exponential growth has converted it into a cash cow for healthcare systems—all while increasing out-of-pocket costs for patients.
Fortunately, there may be a short-term solution to this problem. The current 340B program uses a discount model in which drug companies provide hospitals with access to medicines at significantly lower prices. With little to no oversight of this program, hospitals are then trusted to oversee their dispensing. But as we saw in Mrs. King’s case, bad actors in the system upcharge insurers and patients, pocketing the difference—a gross abuse of what should be a charity care program.
An immediate solution is to transition the system to a rebate model, where providers receive a discount only if they prove basic eligibility for the program. The next step is requiring providers to show that patients received savings on their medication. This transparent approach would lower overall costs while guaranteeing the program benefits the vulnerable populations it was intended to serve.
Ultimately, the 340B program’s infrastructure necessitates governmental reform and greater oversight. This won’t happen overnight, though, which is why a rebate model is the best way to triage the situation so patients can get instant relief.
Read the full op-ed in RealClear Health.