Washington Needs to Put the Federal 340B Drug Discount Program Under the Microscope
Complex health care regulation is always a work in progress. Consider the Affordable Care Act (ACA), which has helped millions of Americans access health insurance. Since 2010, when the act was signed into law, Washington has constantly worked to improve the ACA, and the law has often come under the microscope of lawmakers and even the Supreme Court.
In contrast, the huge federal prescription drug program, known as the 340B Drug Pricing Program, has inexplicably escaped this kind of attention since it was created 30 years ago. Even now, amid renewed energy to improve access to prescription drugs and lower drug costs, the conversation surrounding 340B reform is limited. My question is: Why?
One of many issues that deserves scrutiny is what happens to the discounts that 340B hospitals and clinics receive. Patients who rely on these facilities to access discounted drugs should have the confidence that those hospitals and clinics are being held accountable for passing the discounts on to those patients. But they aren't.
Created by Congress in 1992, the 340B Program was designed to expand access to prescription medications for low-income and uninsured patients. It was designed to increase access to much-needed drugs, including those for complex conditions like autoimmune diseases, cancer, and HIV, by requiring drug manufacturers to provide those treatments to certain eligible hospitals and other covered entities at significantly discounted prices. These are facilities that deliver a significant level of health care and other health-related services to patients with no insurance or with Medicaid.
While the intent was admirable, 340B has ballooned past any expectation that Congress could have reasonably had at its conception, and is now the second largest federal prescription drug program in the U.S., behind Medicare Part D.
Here's how 340B is supposed to work: hospitals and clinics are allowed to purchase prescription drugs at a significant discount if they can show they meet the threshold of providing services to a certain percentage of Medicaid and low-income Medicare patients (at least 27%). These hospitals and clinics are then able to provide these discounted drugs to any eligible patients they serve, particularly those Medicaid and low-income Medicare patients that allowed the hospital or clinic to qualify for the program. But without any legal or regulatory obligation to pass those savings on to patients, 340B-eligible hospitals and clinics can simply pocket the discounts while patients can end up paying undiscounted prices for their drugs. This is particularly concerning for low-income or otherwise vulnerable patients who rely on 340B to afford medically necessary treatments for chronic conditions.
A deeper dive into 340B paints an increasingly unsettling picture. Between 2012 and 2019, the program grew by more than 400%. This explosive growth can be attributed to lenient guidelines, immense variation in how sites nationwide interpret and navigate the program, and limited transparency. In addition, a lack of federal oversight has allowed what some have called bad actor hospitals and clinics to take advantage of the program to bolster their own profit margins without a comparable increase in treatment access for vulnerable patient populations.
Other worrisome findings reveal that patients continue to have limited access to adequate, affordable, and high-quality care while 340B facilities thrive: only 24% of 340B hospitals provide 80% of the total charity care that all 340B hospitals and clinics provide. In addition, charity care represents just 1% or less of the total patient-care costs for one in four 340B hospitals or clinics.
Any successful program, public or private, requires oversight and transparency to continue working for the people who rely on it. Without transparency and oversight about how 340B-eligible entities are adhering to the program, there is no way to assess its performance and identify ways to improve it for the patients it is meant to serve.
Taxpayers deserve to know that all 340B hospitals and clinics are being held accountable for passing drug discounts on and providing quality care to vulnerable patients, allowing them to access the right medication at the right time to optimize health outcomes and minimize the physical, emotional, and financial burdens of disease. The 340B program must be refocused on improving the health of uninsured and low-income patient populations while ensuring that hospitals and clinics do not take advantage of program loopholes to see disproportionately high profits without providing appropriate care. By increasing program oversight and holding eligible hospitals and clinics accountable, federal lawmakers can make sure the 340B program works as it was intended to for patients.
Without that accountability, individuals who have faced health care discrimination and treatment barriers for decades will continue to fall through the cracks, further heightening patient distrust in the health care system.
Brian Nyquist is the Executive Director of the Infusion Access Foundation (IAF), a non-profit advocacy group working tirelessly to ensure patients have access to provider-administered therapy for any and all complex illnesses.