Americans Deserve Better From the 340B Drug Discount Program

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One of my top priorities when I represented Illinois’ 10th Congressional District was making sure government programs – like 340B – reached the people that needed help most. Amid a global pandemic stretching our health care resources thin; I think helping those in need is a priority everyone can support. This makes the Trump administration’s recent executive order on insulin and EpiPens within the 340B Drug Discount Program especially frustrating. Real fixes to 340B could make a bigger difference for vulnerable or uninsured patients if they improved the way Disproportionate Share Hospitals (DSH) use the program instead of narrowly focusing on federally qualified health centers (FQHCs).  

Recently, President Trump signed four executive orders meant to help lower drug costs for Americans. One of them, the “Executive Order on Access to Affordable Life-saving Medications,” would require FQHCs, as a condition of future grants, to offer a 340B discounted price on insulin or EpiPens to low-income patients. The conditions for qualification would include low income patients who are uninsured, have a high unmet deductible, or who have plans with high cost-sharing for either of the two medications.

While the order addresses an important issue of better and more affordable access to lifesaving medicines, it does nothing to fix systemic issues within the 340B program. If real change had been addressed in the executive order, most vulnerable patients in America could have been helped, not just those that rely on insulin and EpiPens.

For context, 340B started off as a small safety-net program in the 1990s meant to give federal grantee providers discounted medications to help them stretch their scarce federal resources. These providers -- community health centers, HIV/AIDS clinics, and community oncology clinics (among others) -- are required to account for how savings from the 340B discounted medicines can improve and expand care for their patients. However, recognizing the financial incentives of accessing large amounts of discounted medicines, large hospital systems quickly took advantage of a lack of clear program rules and poor oversight to drive a massive enrollment in the program, ballooning its size. And 2010 guidance issued by the Health Resources and Services Administration (HRSA) allowed these hospitals to further financially benefit from the program by enabling them to increase 340B revenue through an unlimited number of “contract pharmacy” arrangements with for-profit pharmacies. Since then, the number of contract pharmacies participating in the 340B program has grown from 1,300 to nearly 28,000.

As a result, that same program has now transformed into the second largest federal prescription drug program (when viewed in drug reimbursement absolute dollar terms) behind only Medicare Part D, with DSH hospitals making up 80 percent of the total 340B drug purchases. Critically, DSH hospitals and for-profit pharmacies are not required to account for what they do with the profits they make from 340B, meaning there is no way of knowing if they use those profits to help patients. They can even bill patients with insurance the full list price for the drug and pocket their acquisition cost difference and none of us would be any wiser. Hospitals have resisted calls for even basic transparency into how they use profits to help patients.

The Trump administration’s order turns a blind eye toward hospitals’ abuse of the program. The order would only impact a very small number of care providers, which is not to say the potential impact should be discounted, but rather that it is a missed opportunity to fix the problems brought on from DSH hospitals and contract pharmacies, which again, represent the vast majority of the 340B purchases. The announcement also leaves much uncertain, including how “low income” patients are defined, whether contract pharmacies are impacted, and even if the order itself is legal.

If the President and lawmakers wanted to effectively address rising costs for all Americans while also improving care for vulnerable populations – particularly in a time when at-risk communities are being harder hit from COVID-19 than others – they should focus on holding hospitals accountable for their use of 340B to ensure patients are benefiting. 

It’s time to stop dancing around the edges of the 340B program when looking for ways to improve care for vulnerable or uninsured patients. Meaningful solutions are in reach if we aim our efforts on shoring up the actual problems – namely a lack of accountability and transparency from DSH hospitals and contract pharmacies – instead of narrow fixes that serve only to pay lip service to strengthening the safety-net.

Former Congressman Bob Dold is a spokesperson for the Alliance for Integrity and Reform of 340B (AIR340B), a coalition of patient advocacy groups, clinical care providers, and biopharmaceutical innovators dedicated to reforming and strengthening the 340B program.

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