Oversight urged for 340B drug discount program

A woman shops for medications in a pharmacy. (Photo: Tyler Olson, via Shutterstock

Mark Twain once proclaimed, “The government of my country snubs honest simplicity, but fondles artistic villainy, and I think I might have developed into a very capable pickpocket if I had remained in the public service a year or two.”

These humorous words may elicit a smile, but clearly ring true more than a century later, and most certainly apply to the 340B drug discount program, a program which was created with the best intentions but, sadly, over time has lost its way.

Because of vague language as to what truly defined a legitimate “340B patient” and covered entities, the program grew incredibly quickly

The bad news is, due to a lack of enforcement or accountability, the program has fallen victim to variations of pickpocketing, leaving our most vulnerable out. The good news is that our leaders in Washington, DC have a unique opportunity to fix this problem head-on with bipartisan “honest simplicity.”

To back up and put things into perspective, the 340B drug discount program was created by Congress twenty-five years ago to help uninsured or vulnerable patients gain better access to prescription medicine. It requires manufacturers of prescription drugs to reduce prices of outpatient drugs for federally funded clinics and certain hospitals that are considered to serve a high number of economically disadvantaged patients and communities.

In 2010, the agency responsible for oversight of the 340B program allowed program participants that lacked an on-site pharmacy to contract with unlimited off-site pharmacies, and the Affordable Care Act extended the program to reach multiple hospitals, referral centers and cancer centers.

Because of vague language as to what truly defined a legitimate “340B patient” and covered entities, the program grew incredibly quickly, prompting former Health and Human Services Secretary Kathleen Sebelius to declare that the program “has expanded beyond its bounds.”

To make matters worse, many bad actors emerged amid this maelstrom of confusion and scant federal accountability. The 340B program was designed in such a way that allows its facilities to keep the savings generated between the cost of a drug acquired through the discount program and the price they charge a patient or insurer, thus incentivizing hospitals to prescribe more 340B drugs to more patients.

Because of a loophole in the program that some argue doesn’t explicitly require hospitals to only provide discounted drugs to uninsured or vulnerable patients, hospitals and contract pharmacies are taking advantage of the opportunity and selling 340B drugs to anyone receiving medical care at their hospital or affiliated clinics.

The result? Fully insured patients, not the economically vulnerable and needy, are receiving these discounted drugs at full price, and hospitals and contract pharmacies are able to pocket – or, dare I say, pickpocket – the difference between a discounted drug purchasing price and the amount a patient or insurer pays for the full cost of the drug.

All the while, health care costs increase and struggling Californians and Americans who should benefit from this program are sent to the back of the line while these entities make money.

But there is hope. With so much mudslinging and daggers flying on the health care front inside the Beltway, here’s an opportunity for Republicans and Democrats to join forces to fix the 340B program in the same manner as when they created it a quarter of a century ago.

There is no basis or need for political grandstanding when simple but important remedies are desperately needed.

–Congress should make it a top priority to modernize the program, and they can start by calling for a better, clearer definition of a 340B patient so that these discounted drugs truly benefit those with the greatest financial strain.

–Congress should increase transparency so that we all see and know exactly how these funds are used. No hospital or provider should be using funds for needy patients without accountability – human lives are at stake here.

–Congress should reexamine contract pharmacy arrangements – as then-Secretary Sebelius and others have rightly stated, the program has expanded too fast, too soon. Expanding the program beyond the original focus has created more opportunities for drug diversion and higher costs, which the nonpartisan federal General Accounting Office has cited.

Government leaders, processes and issues have clearly evolved since the days of Mark Twain, but public skepticism and angst about “truth in advertising,” let alone outright honesty in serving the intended public, has not.

But here’s a golden opportunity for our Washington leaders to restore a well-intentioned program to its original effectiveness without any bombastic floor debates, name calling, or filibustering, and ensure that our most vulnerable get the help they desperately need.

It’s time for us to call upon Congress to do the right thing and fix the 340B program.

Ed’s Note: William Remak is founder and CEO of the California Hepatitis C Task Force and chair of the National Association of Hepatitis Task Forces


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