Imagine the federal government created a program intended to help poor and uninsured patients in underserved communities better afford the
healthcare
services they need. Then, imagine that same federal safety net program accomplished the very opposite, lining the pockets of healthcare providers rather than helping vulnerable people struggling to afford the medicines they rely on to treat and manage their conditions — all while Washington policymakers ignored their oversight duties.
Unfortunately, that’s exactly what’s happening under the 340B Drug Pricing Program, which provides a powerful but regrettable example of a “great mistake,” described by economist Milton Friedman as a policy or program the government judges by its intentions rather than its results.
DON’T THROW GOOD MONEY AFTER BAD COVID STIMULUS
Originally established by Congress in 1992, the program was created to help healthcare providers that serve low-income and uninsured patients to purchase drugs at a discounted price. However, according to the federal government’s own reports and audits, many of the discounted prescription drugs that should be available to the nation’s most vulnerable patients are not being passed along — with patients either not receiving those treatments or not receiving the appropriate discounts for them.
In the past 30 years, the program has significantly expanded with little to no additional oversight and accountability into whether the program is helping patients or simply padding well-connected organizations’ bottom lines. Before lawmakers embark on their next prescription drug crusade, they must use their authority to address why a government program is allowing significantly discounted drugs, provided to hospitals and other entities serving the poor and uninsured, to be sold at significant profits to pharmacies across the country.
Some 340B-covered entities that receive the discounted drugs, including many hospitals and federally qualified health centers, or FQHC, contract not only with pharmacies within their state but often with other pharmacies in states across the country, sometimes thousands of miles away. A
new analysis
by the Goldwater Institute found that covered entities in
Arizona
, for example, have contracts with almost 700 out-of-state pharmacies in 33 states. These covered entities are turning significant profits, with no restrictions or requirements on how to use those profits, likely without providing commensurate levels of charity care to the vulnerable patient populations that they should be serving.
There is no shortage of evidence that the program’s results are falling short. Congress’s own watchdog, the Government Accountability Office, has repeatedly
conducted investigations
and
issued reports
calling for more program accountability and transparency.
Congressional hearings
on the program have revealed deeply troubling patterns of these prescription drugs often only being available in affluent areas.
Investigative media reports
have not only confirmed these disturbing patterns but also revealed cases of hospitals marking up 340B discounted drugs by up to 700% and billing commercially insured patients for the full cost. That turns a profit for the wealthy hospital system while some of the most at-need patients suffer.
Any program that allows these drugs to be sold out from under the most vulnerable patients requires patient protections, transparency requirements, and accountability and
oversight
reforms. Lawmakers who are serious about addressing prescription drug access and affordability should first address the need for 340B reform. With a renewed focus on transparency and integrity in the 340B program, lawmakers can put a stop to the far-reaching and cozy, yet secretive, relationships between these entities and pharmacies across the country.
CLICK HERE TO READ MORE FROM RESTORING AMERICA
Naomi Lopez is the vice president of healthcare policy at the Goldwater Institute and is the lead author of the new policy brief, “
The 340B Program Is Now 30: How well is it serving today’s most vulnerable patients?
”
