Taxpayers pay, hospitals play. The non-partisan Congressional Budget Office (CBO) confirms the 340B hospital markup program is costing taxpayers money. This non-partisan government report directly refutes the misleading rhetoric that big, rich hospitals continue to spew in their attempt to distract from their profiteering off the program.
Four things you should know about 340B, according to the CBO:
- 340B hospitals push pricey care, increasing federal spending. The report found that the 340B program incentivizes practices that drive up costs for taxpayers, such as the vertical integration of hospitals and off-site clinics pushing care into more expensive settings and prescribing of more and higher cost medicines.
- The kicker: This builds on findings from Milliman, an independent research firm, that show the average drug spending per patient with commercial insurance and Medicare is nearly 200% higher at 340B hospitals than non-340B hospitals.
- The lack of program guardrails is driving up costs for patients. Big hospitals can buy medicines for as little as a penny and then charge thousands of dollars for them. Since there are no guardrails for how hospitals use profits from the 340B program, patients often aren’t benefiting.
- The kicker: The report says nothing about patients benefitting and said there is no requirement that hospitals report how they use their 340B profits.
- Hospitals exploitation of the program is raising Medicaid costs. The 340B law prevents Medicaid from collecting rebates on prescriptions filled at the 340B price. This means that as more tax-exempt hospitals exploit the 340B program as a profit center, Medicaid rebate losses also rise. This is a hidden tax on patients, taxpayers, and employers.
- The kicker: The report reinforces what others have found, including data from Berkeley Research Group that shows the 340B hospital markup program cost state and federal taxpayers an estimated $6.5 billion per year due to lost Medicaid rebates.
- The program is ballooning in size due to hospital profiteering. 340B continues to aggressively increase in size, morphing from $6.6 billion in drug spending in 2010 to $43.9 billion in 2021.The majority of this growth, $23.8 billion, in spending is not due to market trends but rather is fueled by unnecessary program expansion by hospitals trying to maximize program profits.
- The kicker: A new analysis from ADVI, an independent research firm, shows how the federal government routinely neglected to provide oversight of the 340B program. While 99.7% of 340B providers escape scrutiny each year due to a lack of oversight, the majority of audits that are conducted reveal adverse findings, raising serious concerns.
It’s time to hold big, tax-exempt hospitals accountable.
The 340B program has morphed into the second-largest federal drug program and a money-printing machine for big, tax-exempt hospitals. For years, 340B hospitals and clinics have jacked up prices for patients, employers and the government by as much as 1,000% or more. The new CBO report strengthens the call for urgent reform among policymakers, patient advocates, labor and employers.
As Congress and the Administration look for areas to cut fraud, waste and abuse in government spending, they should focus their attention on the 340B hospital markup program that is costing the government and patients billions.
Learn more at PhRMA.org/340B.
Molly Jenkins
Molly Jenkins is a senior director of Public Affairs at PhRMA, where she leads communications on the 340B hospital markup program. Before joining PhRMA, she led issue advocacy and reputation campaigns at Purple Strategies. She also worked on Capitol Hill in serval different capacities, including leading communications for Rep. Greg Walden and as press secretary for the Energy and Commerce Committee. Molly has an M.A. in Health Communication and Media Relations from Johns Hopkins University and a B.A. in journalism from Texas Christian University.
Molly Jenkins