Correcting the record: Biopharmaceutical companies remain committed to the 340B program and helping patients

The New York Times recently ran a story that paints an inaccurate picture of the 340B program, contract pharmacy participation in the program and the biopharmaceutical industry’s commitment to the program. Today, we’re correcting the record.

Fact: Manufacturers are still giving the 340B discounts, as required by law, to “covered entities” – more than 12,700 hospitals and clinics currently participating in the 340B program. Some companies have recently implemented changes to shipment of 340B drugs in response to decades of program failures, which is being mischaracterized by some. These companies are still providing discounts to 340B covered entities, but in some cases not to offsite pharmacies that were never included in the program to begin with when Congress created 340B.

Fact: The biopharmaceutical industry fully supports the program and has supported the program since it first became law in 1992. In comments submitted just last month to Representative Greg Walden and Senator Lamar Alexander on ways to improve the program, PhRMA stated:

“We look forward to continuing our conversations on meaningful improvements that can be made to ensure the 340B program is overseen and operated in a way that sustains the program for the long-term so that patients more directly benefit from the discounts provided by biopharmaceutical manufacturers. PhRMA and our member companies have long supported the 340B program and the critical safety-net role it was intended to play in our nation’s health care system.”

Fact: Despite 4,000% growth in contract pharmacy participation in the program, there is no clear evidence 340B hospitals and their contract pharmacies always or even usually help needy patients access medicines. In fact, the GAO report found that less than half of hospitals surveyed provide 340B discounts to low-income, uninsured patients at some or all their contract pharmacies. Since patients are currently not getting access to the 340B discount in most cases, limiting shipment of 340B discounted medicines to covered entities or to fewer contract pharmacies would appear to have very little impact on patient access or affordability.

Fact: The program was created to support qualifying nonprofit hospitals and safety-net clinics, not corporate companies like Walgreens and CVS. Despite this, there are more than 28,000 contract pharmacies today, most of which are chain pharmacies. In fact, GAO found that “the five biggest pharmacy chains—CVS, Walgreens, Walmart, Rite-Aid, and Kroger—represented a combined 60 percent of 340B contract pharmacies, but only 35 percent of all pharmacies nationwide.” These large corporations are some of the most profitable in the country, yet they are siphoning the discounts provided by manufacturers away from patients.

Fact: Contract pharmacies were never authorized by Congress. They were born out of 10-year old guidance issued from the Health Resources and Services Administration (HRSA). This guidance had the unintended consequence of opening the doors for thousands of corporate pharmacies to profit off a program that was never intended to be a revenue stream for them. Even the government has said agency guidance cannot impose any binding requirements on the public and lacks the force and effect of law.

As we fight a global pandemic that is having a disproportionate impact on vulnerable patients, it has never been more important for policymakers to ensure federal programs like 340B are benefiting the low-income and uninsured individuals the program was intended to serve. Unfortunately, the program has strayed far off course, with documented evidence of program abuse by covered entities and patients not benefiting.

Just this week, a new GAO report found that for HRSA audits in FY 2012-2019, there were more than 1,500 findings of noncompliance by covered entities with 340B requirements. HRSA told GAO that beginning in Fall 2019 “it would no longer issue findings based solely on noncompliance with guidance” and acknowledged that “the 340B statute does not provide criteria for determining patient eligibility.” Similarly, HRSA is looking the other way at noncompliance with contract pharmacy oversight “because the 340B statute does not address contract pharmacy use.” Clearly this program is fraught with problems if even HRSA is acknowledging it cannot enforce compliance with program requirements.

To get the program back on track, we need to have a fully informed and honest conversation about what is working and not working, as well as real solutions that will help patients. Incomplete pictures that mischaracterize the 340B program only make efforts to improve the program for patients harder.