SUPPORT BIPARTISAN FIXES TO THE 340B DRUG DISCOUNT PROGRAM

Roughly twenty-five years ago, Congress created a program,
the 340B Drug Discount Program, to help safetynet
clinics and community health centers improve the
health of needy communities throughout the country.
Unfortunately, some bad actors are taking advantage
of the program for their own benefit while communities,
including here in Texas, are suffering. Indiana
Representative and doctor Larry Bucshon (R-IN-08) and
California Representative Scott Peters (D-CA-52) recently
introduced legislation, the 340B Protecting Access to
Underserved and Safety-Net Entities Act (Pause), which
is a great first step to provide much needed fixes to the
program.
For those who aren’t familiar with the 340B Drug
Discount Program, it requires the drug manufacturers
to sell their medicines to eligible organizations at steep
discounts but allows heath care organizations to sell
the prescriptions at full price. It started out as a wellintentioned
program but some organizations are using it
to drive profits instead of help patients.
Some bad actors have become adept at taking advantage
of the program because it allows them to acquire
drugs at discounts ranging as high as 60 percent —
often discounts that they do not pass on to patients. In
fact, according to a 2014 report from the Office of the
Inspector General (OIG), two-thirds of 340B disproportionate
share hospitals (DSH) do not offer the discounted
price to uninsured patients.
An increasingly common practice today is for a 340B
hospital to buy an independent oncology practice, which
prescribes high-cost cancer drugs (e.g. often more than
$10,000/month for each patient) and use the purchased
clinic’s 340B program member status to secure steep
discounts to pad bottom lines. Because of this deep
margin, tax-exempt 340B hospitals can make a substantial
profit. Meanwhile, our country’s cancer care delivery
system is shrinking dramatically and the cost of health
care is rising.
The 340B Program has ballooned in recent years. What
was once a program targeting safety-net clinics is now
responsible for over $16 billion in drug purchases. (1)
And, because the program is so large, it is impacting
health care for all Americans. Numerous studies have
shown, including the recent report by Berkley Research
Group, that the 340B program is leading to “upwards
price pressure on drugs.”
Many safety-net participants, such as the sole community
hospitals and rural clinics of rural Texas, are not
the problem. The problem is that the majority of 340B
hospitals and their suburban clinical affiliates provide
little charity care. Too many of these participants are
simply using this government program to increase their
profit margins.
About 22 percent of Texas residents between 19 and
64 years of age are uninsured. The sheer magnitude of
sick patients who do not have insurance is high. We need
appropriate transparency, oversight and operation of this
federal program to ensure that funds intended to care for
this population actually are used to serve it. There are
countless examples of individual cancer patients who live
in close proximity to 340B program eligible tax-exempt
facilities that are unable to benefit from the services they
provide. Patients often simply do not have access.
Texans deserve better. With the 340B Pause Act policymakers
now have the opportunity to act and improve
care for all Americans. Specifically, the 340B Pause Act
would temporarily pause new enrollments of disproportionate
share hospitals, as well as require basic reporting,
similar to what other participants must provide. It’s
also important to note that the bill would not affect rural,
critical access, or sole community hospitals.
We urge Representative John Culberson (R-TX-7) and
other members of Congress to support the 340B Pause
Act. Let’s not miss the opportunity to restore integrity to
this program for the sake of the patients and safety net
providers who truly need it. We, as a country, cannot
afford to continue down the same path.
1. Fein A. Challenges for Managed Care from
340B Contract Pharmacies. Journal of Managed Care &
Specialty Pharmacy. 2016;22(3):197-203.
Debra Patt, MD, is Vice President of Texas Oncology
Ray Page, DO PhD is President of The Center for
Cancer and Blood Disorders, Fort Worth, TX