By Michael Hazel
Some well-heeled hospitals and pharmacies are benefitting from an important public program that was actually meant to help low-income Americans afford needed medications. Lawmakers in Washington are now taking steps to stop this abuse. With 15 percent of the population in the United States – some 24 percent in Texas – lacking health insurance, let’s hope these policymakers are successful.
Established in 1992, the 340B program was designed to provide health care facilities serving mostly low-income populations with deep discounts on pharmaceuticals, with the presumption that those medicines would be sold to indigent patients at below-market rates.
The idea of 340B is a noble one. Drugs are an incredibly effective way to improve patient health. But even with passage of the Affordable Care Act and Medicare Part D, many Americans still lack access to medicines.
The poverty rate for Texans, 17 percent, is higher than the national average. For this group of Americans, 340B is critical.
Unfortunately, there is no guarantee that 340B is helping those who need it most. Given the loose guidance around how the program works, hospitals that participate in 340B can purchase medicines at deeply discounted prices, resell them to patients at full price and pocket the difference.
The reasons why some hospitals can get away with such behavior are simple enough: the 340B program doesn’t actually require participating hospitals and pharmacies to pass along their drug discounts to low-income patients.
The Duke University Health System, for instance, generates about $500 million in profits annually. Only 5 percent of its patient base is uninsured. Yet Duke is still an avid participant of 340B, raking in millions of dollars in discounts every year.
The Health Resources and Services Administration (HRSA) recently released the results of the first-ever audits of 340B. Officials found that 51 participating hospitals aren’t actually eligible. Last year, HRSA de-certified over 350 entities from participating in the program because they no longer qualified.
Despite its massive structural flaws, 340B has been expanded significantly in recent years. Over the last eight years, the number of hospitals enrolled in the program has tripled. Today, one-third of our nation’s hospitals now participate.
Meanwhile, recent tweaks to 340B have also allowed participating hospitals to expand the number of outside “contract” pharmacies they use to distribute drugs. Between 2010 and 2013, the ranks of such pharmacies grew by nearly 700 percent. Today, 22 percent of participating providers use contract pharmacies.
This growth has wildly outstripped expectations. Two years ago, officials estimated there would be 11,500 contract pharmacies by 2013. There are now 30,000.
In theory, one might consider this expansion a way to reach more people. However, a recent report on contract pharmacies by the U.S. Department of Health and Human Services Office of Inspector General found that of those hospitals it interviewed, just one in three offered the 340B discount to uninsured patients in at least one of their contract pharmacies. Just like some of these participating hospitals, some of these contractors frequently sell 340B drugs at full price to uninsured patients and pocket the difference.
My organization, Texas Nurse Practitioners, is dedicated to promoting and supporting quality health care through leadership, education and advocacy. We strongly support the mission of the 340B program. In practice, however, it has gone awry.
Fortunately, a group of federal lawmakers is stepping up to the plate to fix the program. They have called on HRSA to immediately improve oversight and ensure the program assists those it is meant to serve.
340B was intended to make vital medicines accessible to low-income and uninsured Americans. Instead, in many instances, it is being used by some to make money. This behavior must stop – immediately.
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Hazel, DNP, APRN, FNP-BC, is the president of Texas Nurse Practitioners (TNP), of which he has been a member for the past ten years. For the last five years, Hazel served on the executive board of TNP in various roles including Treasurer, Vice President and President-Elect.
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This author is make presumption not based in the letter or in fact of the original law. The program was designed to extend federal resources farther. Since the law does not specify how, some entities do this through: direct medication to patients, free/discounted clinical services, indigent patient transportation, etc.
Also keep in mind that the original Law has been expanded by BOTH Republican and Democratic controlled Houses of Congresses. The original bill set minimum requirements for participation by NON-PROFIT entities, federal grantees, entities assigned government responsibilities for the indigent, etc. But one major factor that was not anticipated was that with the economical nature of the US, patient encounters that create a facilities eligibility are on the rise and thus elevating more facilities to become eligible.
Since it can take 3 – 5 years for a facilities to start seeing a patient eligibility shift, only time will tell whether all healthcare facilities will see an increase or decrease in their qualification parameters.
There is a significant difference between “being used by some to make money” and entities using the program to limit losses for indigent care (in all forms) and underpayments from any & all 3rd parties payers.
I also find it interesting that there are no references in this article concerning any alleged manufacturer abuse. Nor do I see any mention of prior program knowledge or the evolution of the Section 340B of The Public Healthcare Services Act.
Yet one more example of trying to use the government to fix a problem that the government has no business trying to fix. The Federal government has spent more than 40 years and more than 5 TRILLION dollars trying to cure poverty. And all we have to show for thousands of failed programs and trillions of wasted dollars stolen from taxpayers is more poverty than we started with.
So, what do our legislators insist on doing? They keep insisting that “this time” they will write a bill that actually works. And then the bureaucrats write another 10,000 pages of legalistic verbal sewage in order to accomplish their bureaucratic vision of what the legislators wanted to happen.
When the smoke clears what we have is yet one more program that doesn’t accomplish anything except to provide more jobs for yet more bureaucrats to administer yet another program. It also provides endless opportunities for quasi-governmental entities and well connected businesses and corporations to game the system and extract the money that was intended by well meaning but criminally naive legislators to go to “the poor”.