The Centers for Medicare and Medicaid Services rang in the new year by cutting what Medicare pays hospitals for certain drugs by nearly 30 percent. Hospitals are naturally opposed to this decision and have sued to block the change, arguing that patients and hospitals alike will suffer. But don’t be fooled. A review of the program shows this cut is smart policy that will benefit both patients and taxpayers.
Congress created the 340B Drug Pricing Program in 1992 to offset some of the costs hospitals incur when they treat uninsured and underinsured patients. Over the past 25 years, however, the program has expanded exponentially. Hospitals have exploited the lack of oversight and program requirements to profit at the expense of patients and taxpayers — corrupting the program’s intent, jeopardizing its sustainability, and driving up the cost of drugs and other services for everyone.
