The 340B Drug Pricing Program Needs Comprehensive Federal Reform
The 340B Drug Pricing Program is important for many minority and vulnerable communities. Federal policymakers created the 340B Program in 1992 to lower the cost of outpatient medicines for uninsured and vulnerable patients being treated at safety-net healthcare entities through manufacturer discounts. While well-intended, the program today is not fulfilling its objectives and needs comprehensive federal reform.
Unfortunately, while Congress works towards federal reform to ensure healthcare access and health equity, states throughout the country are exploring policies to expand the 340B Program and its problems.
It’s no surprise that chronic illness and affordability challenges can cause job loss, slow up wage gain and prevent work entirely. All Americans don’t share this burden equally, though. Minorities—including Black, Hispanic and Native Americans—are up to two times more likely than white people to have major long-term conditions. Six in 10 adults in the U.S. live with chronic disease, and 4 in 10 live with more than one. The total costs of chronic disease are more than $1 trillion every year, and a handful of chronic disease and risk factors alone cost more than $35 billion a year in employee productivity.
Community and business leaders should be at the forefront of healthcare reform to ensure patient access and affordability.
340B is not lowering the cost of medicines for patients
Today, the 340B Program is not lowering the cost of outpatient medicines for many patients. In fact, the opposite is happening. Patients are spending 2.5 times more on medicines at 340B program entities than at non-340B entities. This program failure is happening while 340B entities make billions of dollars, with more than half of the top 20 companies on the Fortune 500 list profiting off the program.
While uninsured and vulnerable patients are failing to receive savings on 340B medicines, the program is working to increase the cost of all medicines for all patients—affecting costs throughout the broader healthcare system. This is due to the massive size of the 340B Program today, and because the program incentivizes providers to prescribe high-cost medicines “even when effective and far cheaper options exist.”
340B is eliminating basic medical services, especially in poor and underserved areas
The 340B Program is not only affecting the price of medicine, but it’s increasing healthcare costs for patients overall. The program is driving consolidation of physician practices into hospitals, which leaves patients with fewer community-based provider options and pushes them into higher cost settings. This trend affects all healthcare services, not just services directly related to the 340B Program, including higher costs for diagnostics and primary care.
The New York Times published a recent investigation titled, “How a Hospital Chain Used a Poor Neighborhood to Turn Huge Profits” which explored how the 340B Program is eliminating basic medical services, especially in poor and underserved areas.
Thankfully, Congress is hard at work on comprehensive reform and has launched an investigation into how 340B entities are spending their program revenue. A bipartisan group of six U.S. Senators also released a draft of legislation that intends to provide “clarity, transparency, and accountability in the 340B program.”
Congress can follow the Alliance to Save America’s 340B Program (ASAP 340B)—a partnership of community health centers, patients, providers, consumer advocates and leaders from the biopharmaceutical industry—to get the program back on track. ASAP 340B drafted a set of policy principles that ensures prescriptions are offered to patients at a discount and prevents entities from profiting off the program, as originally intended.
With ongoing reform at the federal level, now is not the time to expand the problems within the 340B Program in states until we can be sure that the program is working to improve healthcare access and healthy equity. I urge policymakers to focus on healthcare reforms that will ensure a healthy workforce.