340B Program Needs a Prescription for Reform
Just when you think Washington’s health care mess couldn’t get any worse, along comes the 340B program. Its bureaucratic-sounding name alone hints at the absence of transparency and lack of adequate oversight that unfortunately besets what once was a well-intended program.
As lawmakers in Washington ponder solutions to address the spiraling costs and mounting complications stemming from the Affordable Care Act, the growing pressure to fix or repeal that law has thrust a little known (at least by most taxpayers), but enormously complex and increasingly bloated federal program into the spotlight.
If there’s ever been a poster child for government programs gone wrong. It’s 340B.
The 340B program was created in 1992 with the intent to provide support for certain safety-net hospitals and clinics treating large numbers of indigent patients. Congress’ objective was ensuring prescription drugs at discounted prices to low-income patients served by these facilities.
Government’s proclivity for creating programs that sound good in their infancy have an unfortunate way of running far away from their noble intentions, driving up costs and creating staggering new bureaucracies in their wake.
And, so it is with 340B.
Flash forward to today, and more than 16,000 medical facilities, everything from hospitals to community health centers, now participate in the program.
However, in one of the most astounding revelations about this program, 340B doesn’t require participating hospitals to pass along their drug discounts to the low-income patients they serve. In fact, in many cases, the health care facilities are banking the savings.
In one well-publicized case, Duke University Health System generated about $500 million in profits annually. With only 5 percent of its patient base classified uninsured, Duke’s ability to take in millions of dollars in 340B discounts each year is raising questions, as it should.[1]
So, what’s the solution? It’s clearly not what some in the U.S. Congress have proposed. Under one proposal, the government would allow Medicare Part B to capture the discount prices in the 340B program.
Today, the savings from 340B lower price medicines rarely get passed along to patients in the form of lower cost drugs. And, now, some members of Congress want the savings instead to flow to the U.S. Treasury?
Washington has found a way to collect more revenue for the government. While that may sound benign to some, the sobering reality is such a proposal would have the unintended consequence of driving up prices for everyone else.
The lack of oversight, accountability and transparency in the 340B program is frankly appalling, and it’s good to see some lawmakers stand up and take notice.
But, now it’s time to take appropriate action.
A group of federal lawmakers has done just that by proposing the Health Resources and Services Administration (HRSA) to provide improved oversight and ensure 340B serves only those intended to be helped – indigent patients under the 340B program.
It’s time to prescribe a thorough review and fix for a tragically flawed program.
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Bill Hammond is President and CEO of the Texas Association of Business. Online at www.txbiz.org, Twitter @txbiz and @texashammond.