In today’s chaotic world of politics, it’s difficult to find something everyone can agree on. However, there is near-universal consensus that most prescription drug prices are too high, and they get increased too much and too often. We also largely agree that finding ways to ensure that patients have access to life-saving medicines and services can mean the difference between a full, productive life and one constrained by preventable or treatable medical conditions.
According to a late August Kaiser Family Foundation poll, "about eight in ten adults (82%) say the cost of prescription drugs is unreasonable." That included 89 percent of Republicans in the same poll saying drug company profits are a "major factor" driving up drug prices. Policymakers in both parties are looking for ways to tighten the reins on drug pricing but, not surprising, drug company lobbyists are working harder than ever to thwart those proposals at every turn. While that legislative dance continues, the drug industry has trained its sites on existing laws that limit their prices.
A top priority for them is undermining the 340B drug pricing program—a decades-old program that is overwhelmingly supported by both Republicans and Democrats, and is accountable, proven, and essential to ensuring at-risk patients and underserved communities have access to lifesaving medicines and care. Drug industry lobbyists are flocking to Capitol Hill – and to some state capitals – trying to convince lawmakers to put the brakes on 340B. In such states as Louisiana and Arkansas the industry has gone to court in an attempt to gut laws passed at the state level.
Created in 1992 by a bipartisan vote of Congress, 340B grants drugmakers access to Medicare Part B and Medicaid markets—approximately half the U.S. population—in exchange for providing discounted drugs to health care providers serving the nation’s underserved populations. To qualify for 340B, hospitals must meet strict criteria demonstrating they serve a disproportionate share of patients with low incomes or those living in rural America. Congress intended for 340B to help ensure these providers remain financially viable by using 340B savings to “stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services,” fulfilling their vital role in the health care safety net.
What makes 340B unique is the funds for patient care come out of drug company profits rather than taxpayers’ pockets. Other than oversight funding, 340B costs the government nothing and provides enormous value to patients and communities dependent on the health care safety net. When considering the topline monetary reward drugmakers receive from this deal, 340B represents a small entrance fee to a large universe of lucrative opportunities.
While 340B discounts represent a sliver of the American drug industry’s profits, industry leaders are pushing to limit the scope of the program. In fact, more than 20 of the largest manufacturers have unilaterally stopped complying with long-standing federal policy and imposed severe restrictions on 340B pricing for drugs dispensed by partner pharmacies. Many of these drugs have been on the market for years and their manufacturers have frequently raised their prices. For instance, the three manufacturers of insulin sold in the U.S. are infamous for increasing their prices by 1,200% between 1996 and 2019. Other frequent targets for massive price hikes are specialty drugs, which already are among the most expensive on the market and often are available only through specialty pharmacies that the drug companies designate.
Published, peer-reviewed research demonstrates the opposite. 340B places curbs on manufacturers’ drug pricing behavior and saves money for the entire health care system. The absence of any credible studies supporting the opposite notion is glaring proof of how hollow that narrative is.
Congress included provisions in 340B that penalize drugmakers for price increases that exceed the rate of inflation, and these penalties have worked well. A landmark study published by the Journal of the American Medical Association (JAMA) found these 340B inflation penalties on drug companies that hiked their prices saved Medicare Part D an estimated $7 billion from 2013 to 2017. The manufacturers of many of those drugs are among the group now withholding 340B pricing from safety-net providers.
Another peer-reviewed study published in JAMA looked specifically at three drugs made to treat hepatitis C. It found that when manufacturers cut their prices under pressure, their revenue actually increased by 28% because they avoided 340B’s inflation penalties.
These inflation penalties work best when they apply to all 340B drugs. By refusing to offer 340B discounts, drugmakers are sidestepping the penalties in a way that will allow them to raise their prices with impunity. That will mean higher prices for all patients, not just 340B hospital patients. It also means higher drug company profits.
Ongoing lawsuits from drug companies aimed at blocking government enforcement and oversight of 340B are pending in federal appeals courts and could make their way to the U.S. Supreme Court. While 340B hospitals and other providers had hoped enforcement would resolve this costly standoff, it is now clear that Congress will need to act to restore 340B to its original intent and make clear that drug companies cannot selectively set their own rules for how they comply with the law. Bipartisan legislation is coming to protect patients relying on these 340B providers, and Congress should approve it.
Maureen Testoni is President and CEO of 340B Health. 340B Health is an association of more than 1,500 hospitals and the leading advocate for hospitals that serve their communities through participation in the 340B drug pricing program.
