Guest: Drug pricing program should not be a profit center for contract pharmacies
What if I told you there was a federal government program that had little oversight and guidance, had ballooned far beyond its original purpose, and had billions of dollars at stake. Would it surprise you that the program is rife with corruption and being used to boost the bottom line of private companies?
Probably not.
Unfortunately, that is exactly what is happening with the “340B Drug Pricing Program” a program most Oklahomans are unfamiliar with but has grown to become the second-largest national drug program, behind only Medicare Part D.
The 340B program is intended to serve the neediest patients by providing treatments at little to no cost. But some of the nation’s most prestigious hospitals, pharmacy benefit managers (PBMs) and pharmacies are using the program to enhance their own bottom lines at the expense of uninsured and low-income patients. They essentially have access to purchase prescription drugs at a discount, charge insurers full price and then pocket the difference.
The 1992 statute under which the program was established states that program savings are intended to “stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.”
But the program has spiraled into a profit center for bad actors in the health care system. Three decades of poor oversight of the program has empowered hospitals and PBMs to exploit charity care to pad their own profits by capturing the savings intended for needy patients. Under current law, providers are under no obligation to reserve the discounts of such drugs for needy patients or even report what they do with the savings they obtain through 340B.
As a result, the program has expanded well beyond its intended scope. In 2010, the Health Resources & Services Administration (HRSA), the agency that oversees the 340B program, opened the scope of the program to allow covered entities to contract with an unlimited number of third-party pharmacies to dispense 340B drugs. The number of contract pharmacies in the U.S. has skyrocketed from fewer than 1,300 locations in 2010 to nearly 28,000 in mid-2020.
In Oklahoma alone there are more than 1,600 contract pharmacies — that’s more than the entire U.S. a little more than a decade ago. Nearly half of those pharmacies aren’t even located in the state. This explosion of out-of-state contract pharmacies prompts the question: Who is benefiting from this policy?
Unfortunately, Oklahoma patients are not the answer.
A new report further demonstrates the abuse of the 340B program by hospitals and PBMs. The report finds that 72% of private nonprofit hospitals had a “fair share deficit,” meaning they spent less on charity care and community investment than they received in tax breaks.
The natural question that follows these eye-opening facts: How much of that money is realized by the patients served by 340B? The lack of transparency into how the program operates makes the answer at best unclear, and at worst an indication of improper use of 340B to turn a profit.
A 2018 report from the Government Accountability Office said “federal oversight of compliance at 340B contract pharmacies needs improvement,” and that nearly half of hospitals and covered entities do not always provide 340B discounted prices to uninsured and indigent patients.
For too many years, too few policymakers paid any attention to the 340B drug discount program, accepting the false idea that nonprofit hospitals and other covered entities were using 340B savings to “stretch scarce federal healthcare resources” in service of our most vulnerable patients.
Oklahoma patients are paying the price as they fail to realize the benefits of a program they likely do not even know exists. Lawmakers must take action to return the 340 Drug Pricing Program to its original intent of providing charity care to the neediest Americans.
Peter Pitts is president and co-founder of the Center for Medicine in the Public Interest (CMPI). He is a former member of the United States Senior Executive Service and associate commissioner of the U.S. Food & Drug Administration.
This article originally appeared on Oklahoman: Oklahoma contract pharmacies should not be profiting from 340 program
