ICYMI: Citizens Against Government Waste Speaks Out Against Waste in 340B Drug Discount Program

BIOtech Now
Daniel Seaton

Writing this week for The Hill, Elizabeth Wright of Citizens Against Government Waste highlights an egregious example of waste caused by uncontrolled and unintended growth in the federal 340B drug discount program – a problem we have highlighted here before.

The program, created by Congress in 1992 to help certain safety-net providers reduce prescription drug costs by requiring that pharmaceutical companies provide deep discounts on outpatient medicines, with the goal of ensuring that the uninsured and vulnerable patients served by those providers are able to receive the treatments they need.

Unfortunately, as Wright notes, evidence continues to grow that the program has grown beyond the scope and intention for which it was created:

“…like many government programs that were designed to help the poor and vulnerable, 340B has become bloated and wasteful, and, even worse, often fails to serve patient’s best interests. Equally concerning is the fact that abuse within the program has led to steep consequences for both physicians and local health care communities.

A June 2015 Government Accountability Office (GAO) report found there is “a financial incentive at hospitals participating in the 340B program to prescribe more drugs or more expensive drugs to Medicare beneficiaries.

Today, hospitals represent 80 percent of sales associated with the 340B drug discount program, while agreements with for-profit pharmacies are being signed at an exponential rate. From 2010-2014, the number of unique pharmacies serving as 340B contract pharmacies increased by 154 percent, even though the 340B law did not provide the authority to contract with pharmacies.

The bad actors have used their padded bottom lines to expand, leading to a record rate of consolidation of local health facilities. Fewer health care choices mean less access to life-saving care and medicine, as well as higher costs for patients.

It should be disturbing to lawmakers and taxpayers that a program originally intended to stretch federal resources is instead being exploited to capture as much money as possible for non-related purposes.”

Wright proposes several solutions to rein in abuse of the program and ensure that the discounts are benefiting the vulnerable patients for whom the program was created:

“First, a 340B program-eligible patient must be clearly defined; without such clarity, hospitals and pharmacies will continue to abuse the system.

Another important reform would be a clearer meaning of charity care, which makes a hospital eligible for the drug discounts. A July 2017 Politico analysis found that during the Obama administration, the top seven ranked hospitals, more than half of which utilize the 340B program, cut charity care by 35 percent between 2013 and 2015, while their combined revenue increased by $4.5 billion annually.

Hospitals must also begin to be transparent about how they are spending the savings under the 340B discount program to help eligible patients, as there is no requirement for them to do so under current law.”

Read the full piece here.

Full BIOtech Now Article here

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