Nearly half of U.S. adults struggle to afford healthcare, according to new polling. For cancer patients and their families, those financial pressures too often force impossible choices about treatment, medication, and household finances during the very moments they need support most.
As policymakers search for ways to lower costs, expanding a little-known federal charity program designed to help low-income patients might seem like an appealing solution.
But expanding the program, which some big hospitals have long used to charge patients hefty markups on prescription drugs, would only drive costs higher. It'd be far better to push for reforms that ensure patients, not hospitals, are the program's chief beneficiaries, as the program intended.
In 1992, federal lawmakers created a limited charity program, known as 340B, to allow a few dozen safety-net hospitals to purchase heavily discounted drugs from manufacturers. Congress expected these facilities to use the savings to help low-income and uninsured patients, whether by passing the savings on to patients directly or using the extra earnings to provide more charity care.
But lawmakers never actually established requirements for hospitals to do so. Over the years, this gap, coupled with a lax definition of an "eligible" 340B patient, has allowed thousands of hospitals across the country to enroll in, and abuse, the program.
340B has exploded in size. Discounted drug purchases totaled about $4 billion in 2009. As of last year, they exceeded $100 billion.
Many 340B hospitals buy drugs at a steep discount, only to turn around and charge patients five or 10 times the acquisition cost. They also have strong financial incentives to steer patients toward higher-cost drugs that generate larger profit margins.
One study, for example, revealed that 340B hospitals earn over 10 times more from cancer drugs than non-340B hospitals -- with some of those profits coming directly from patients in the form of higher out-of-pocket costs. Meanwhile, the inflated costs force insurance companies to hike premiums in order to cover the increased spending.
Simply put, 340B was created with the best of intentions. But the lack of defined parameters has resulted in some hospitals being the primary and overwhelming beneficiaries of the program instead of patients. Many 340B-enrolled hospitals provide less charity care than non-340B hospitals. And most 340B hospitals earn more from the program than they spend on care for vulnerable patients.
In some cases, hospitals are using their profits from the program to buy up independent doctor practices, which enables hospitals to further expand their patient overreach and sale of medicines at huge markups.
Hospitals are also expanding their 340B footprints through an increasing number of contracts with retail pharmacies. These agreements allow hospitals to benefit from discounts on drugs even when prescriptions are filled at pharmacy counters far from the underserved communities 340B was intended to help.
There's little question that 340B is failing patients. Expanding it would simply exacerbate a broken status quo.
If we're serious about improving the lives of cancer patients and their families, we must focus on reforming 340B, not expanding it. Reform starts with meaningful eligibility, transparency, and accountability requirements that ensure low-income and vulnerable patients directly benefit from the program through charity care and lower drug prices.
Patients deserve a healthcare system that eases the financial burdens of a cancer diagnosis. Too often, 340B does the opposite.
With the right reforms, the program could once again help the low-income and vulnerable patients it was meant to serve.
Kim Czubaruk, JD, is Vice President of Policy at CancerCare.
