Time 340B Drug Pricing Program Established in 1992, the program was intended by Congress to help low-income and uninsured patients afford prescription drugs. Pharmaceutical companies that make drugs covered by Medicaid are required to participate in the program, which offers them to patients at a discount that averages 25 to 50 percent off the wholesale purchase price.
Unfortunately, today the 340B program is not living up to the expectations it was designed to deliver, and there is mounting evidence that special interests have hijacked the program and exploited loopholes for their own gain.
Consider, for example, the fact that since the Affordable Care Act was passed in 2010, the 340B program has expanded significantly, allowing 340B hospitals to contract with unlimited pharmacies to provide care to many more low-income communities. Because of a lack of accountability for the program, the expansion has resulted in hospitals reaping profits from the program without any benefits for patients.
Research clearly shows that hospitals’ participation in 340B does not improve the health outcomes of low-income patients. A July 2023 report on 340B Disproportionate Share Hospital (DSH) Locations found that only 35% of hospitals are located in medically underserved areas, exacerbating the problems caused by 340B hospitals siphoning resources from low-income areas to benefit wealthier ones.
The lack of transparency and oversight allows bad actors to continue to game the system, and consumers and taxpayers pay the price for the misappropriation and waste of 340B funds through higher drug prices, taxes and insurance premiums.
A 2022 New York Times article said that at a Richmond, Virginia, hospital owned by Bon Secours, instead of reinvesting profits from 340B drug sales back into DSH to improve patient care, the money was invested in facilities in wealthy areas of the city. Dr. Lucas English, who worked in the hospital's emergency department, said, “Bon Secours was basically laundering money through this poor hospital to its wealthy base…It was all about profit.”
This exploitation not only undermines ethical standards, it also puts the health safety net at risk for millions of people.
Clearly defining who a 340B patient is and limiting eligibility to only low-income patients is critical to the future of the program. Pharmacies must verify eligibility before receiving the discount, and patients must be receiving care from a physician at a 340B hospital. Covered entities and contract pharmacies must be prohibited from taking unfair advantage of 340B discounts. These common-sense measures will prevent multiple covered entities from claiming the same benefits under the 340B program.
While the House Energy and Commerce Committee passed HR 3290 to improve transparency in the 340B program on May 24, 2023, and the Subcommittee on Oversight and Investigations held a hearing on 340B on June 4, 2024, no such progress has been made in the Senate, where the most prominent effort is led by the bipartisan Gang of Six. Discussion draft published It was reported on Feb. 2, 2024 that the bill was scheduled to be introduced before the August recess, but this turned out to be incorrect.
Senators should act swiftly upon their return and introduce a bill into the Senate before the end of the 118th Congress. Any further delays in action on 340B reform are unacceptable. Special interests should not continue to exploit the program and win while taxpayers and patients continue to lose out.
It's time to get back to work. Congress must swiftly consider and enact legislation to reform the 340B program and restore its original purpose of providing affordable drugs to those who need it most. Implementing these reforms will ensure that 340B discounts directly benefit patients, rather than boosting special profits. The health and well-being of millions of Americans depends on clearing up the 340B mess.
Tom Schatz is president of Citizens Against Government Waste..
