New year, same exploitation of the 340B program

It’s a new year, but — unfortunately for patients — problems with the 340B Drug Pricing Program remain. Without action from Congress, large nonprofit hospitals across the country will continue to exploit a program meant to help vulnerable patients get the medicines they need.

It’s well documented that the 340B program is not working for patients. Under the program, participating hospitals buy 340B medicines at discounts so steep (averaging nearly 60%) that some medicines may only cost them a penny. The expectation is that hospitals use the money they save to help vulnerable patients access discounted medicines. But the program lacks any kind of meaningful transparency or accountability standards. As a result, many hospitals are taking advantage of the program — pocketing these savings for themselves instead of using the money to lower cost sharing on medicines for vulnerable patients.

Here’s how abuse of the 340B program is hurting patients:

• 340B hospitals are driving up costs for patients. Hospitals are charging 500% more for medicines than they paid, on average. But 340B hospitals take this even further. The average cost per prescription is more than 150% higher for patients at 340B hospitals compared to non-340B hospitals. Not only are hospitals marking up these drugs but often they also are not lowering cost sharing for low-income and uninsured patients who may be struggling to afford their cost sharing.
  
  
• Consolidation and health care costs are increasing. Studies have found that 340B creates incentives for provider consolidation, and larger 340B hospitals were responsible for roughly 80% of hospital acquisitions between 2016 and 2022. This consolidation creates powerful, large hospital systems that raise costs for patients while reducing quality of care, as the Federal Trade Commission has warned.
  
  
• Access to care for vulnerable patients is getting worse. A majority (65%) of 340B hospitals are not located in the medically underserved communities they’re expected to serve. And this is no accident. As numerous media investigations and experts have found, 340B hospitals are expanding into more affluent areas to generate higher profits while slashing services or closing facilities in underserved communities. A program designed to make health care more equitable has devolved into one that exacerbates disparities in how vulnerable patients access care.
  
  
• Greater hospital profits equal less charity care. A recent analysis examined operating margins and charity care levels of 340B hospitals, finding that the top performing 340B hospitals collected nearly $10 in profit for every $1 they invested in charity care in 2021. Adding insult to injury, nonprofit hospitals, many of which participate in 340B, receive billions in tax breaks each year ostensibly because they are providing community benefits consistent with their charitable purpose, including financial assistance for low-income patients. But patients are often not receiving this assistance. Abuse of the 340B program raises costs for everyone, including payers like Medicare.

Commonsense reforms are needed to get 340B back on track and working for patients. For starters, Congress should require hospitals to share 340B discounts on medicines with eligible patients. Congress should also strengthen eligibility requirements to ensure participating hospitals are truly supporting underserved communities.

A new year provides lawmakers a new opportunity to fix the program and make sure it’s working for vulnerable patients.

Learn more at PhRMA.org/340B.