The healthcare landscape is becoming increasingly hostile to patients. Nearly three out of four individuals today owe debt to hospitals and more than 10% of patients carry medical debt that can lead to a cycle of financial hardships, stress and poor health outcomes impacting aspects of life including employment, housing, and food security. Decades after Congress drew up the 340 Drug Pricing Program as a safety net to help the most vulnerable among us, it’s beyond time that Congress find common ground to increase oversight of the 340B program and ensure patients – not hospitals – are benefitting from the program to manage their health.
The 340B program was designed to enable non-profit healthcare providers to purchase outpatient prescription drugs at discounted prices, and then use the savings to help patients by offering care or medications at low or zero cost. Since its creation, the 340B program has experienced massive growth with little evidence that it is actually benefiting vulnerable patients across the country as intended. In 2022 alone the program exceeded $100 billion (yes, billion) in sales. As thousands of hospitals have joined the program, there is growing evidence that shows the system is wrought with waste and abuse, with healthcare systems getting richer and patient debt getting deeper, leaving patients to ask: What about me?
Nationally, in 2021 the average charity care ratio – or percent of a hospital’s operating expenses going toward charity care – hit a 10-year low. The national average of charity care rates fell to just 2.3% in a decade, even while the number of participating hospitals in 340B grew to an all-time high. Rather than providing relief to patients, hospitals and some health centers are leveraging their participation in 340B to increase executive compensation and expand their networks into affluent communities, boosting services in wealthier communities while failing to serve communities in need, or in some instances providing the capital for expanding business into other sectors like housing, with potentially devastating consequences.
Increasingly, federal and state policymakers are investigating how the 340B program is being put into use, and the results are often shocking. This fall, the U.S. Senate Health, Education, Labor, and Pensions (HELP) Committee launched an investigation into Bon Secours, the nation’s largest charity hospital chain that took advantage of the 340B program, buying cancer drugs at a discounted rate and selling those same drugs at a seven-fold increase. Numerous states have introduced legislation to address the shocking level of corruption in 340B and call for more transparency, including the Virginia General Assembly who introduced legislation after the Bon Secours investigation.
While policymakers are more frequently investigating abuses of the 340B program, the courts continue to side with providers due to lack of clarity in the statutory language – fueling more expansion of a program already vulnerable to abuse. As the Food and Drug Law Institute asked, “Why rob banks when you’ve got 340B?” Indeed, a recent court decision in Genesis Healthcare, Inc. v. Becerra highlights the point when the judge declared that Health Resources and Services Administration (HRSA), the overseer of the 340B program, cannot impose restrictions on patient definition beyond the language in the statute. The decision demonstrates a lack of understanding of the serious concerns with the 340B program and has the potential to make well-documented abuses in the 340B program even worse. The decision also highlights the continued need for meaningful reforms to reign in these abuses and restore the charitable intent of the 340B program.
It's understandable that legislators can sometimes be intimidated when it comes to criticizing hospitals and health systems. Often times, hospitals are the largest employers in Congressional districts and even whole states. That does not change the need for legislators to remember the need to prioritize patient access to charitable care over the economic interests of business leaders in the district, especially in the face of such rampant exploitation of the 340B program.
The lack of 340B oversight by Congress, and confusion in statutory language for such a large federal program, lends the program to abuse and a patchwork of judicial and state legislative efforts that often do more harm than good. Members of Congress must work together in a bipartisan manner to reform the 340B program to require uniform transparency and greater accountability from all covered entities, contract pharmacies, and middlemen touching the program. Legislative efforts must be focused on more oversight to ensure dollars saved benefit patients, not bottom lines.
In the absence of congressional action, 340B will continue to grow and be exploited for profits by bad actors to the detriment of patients. By clarifying the intent of the program and putting greater guardrails in place, we can ensure 340B actually helps the most vulnerable Americans among us.
Jen Laws is the President & CEO of the Community Access National Network (CANN), a national non-profit organization that works to improve access to healthcare services and supports for people living with HIV/AIDS and/or viral hepatitis across the country for the last 27 years.
