This safety-net program is failing many vulnerable patients
Why it’s important
340B is now the second-largest federal prescription drug program, behind Medicare Part D.
What this means
The overly broad guidance, historically weak oversight and lack of transparency have contributed to the $38 billion program often failing patients most in need.
340B requires drug manufacturers to sell outpatient medications at a discount — ranging on average from 25% to 50% but can be as high as more than 90% — to covered entities.
Covered entities include qualifying hospitals and safety-net clinics, which are known as grantees.
Community health centers and other grantees qualify based on the receipt of a federal grant from the Health and Human Services department to support care for vulnerable populations.
Hospitals qualify in part based on how many low-income Medicare and Medicaid patients they admit and other safety-net characteristics.
340B participating grantees must meet federal reporting requirements under their grants while hospitals face no such requirements under the program.
Data from independent government reports indicate that many 340B hospitals may be charging even uninsured patients the list price for their medicines despite the discounted price the hospital paid.
Today, 340B generates billions in profits for primarily large hospitals, for-profit pharmacies and other middlemen like vendors and pharmacy benefit managers.
Some covered entities and for-profit pharmacies are siphoning resources away that could be helping many patients afford their medicines with little to no transparency into where the money is going.
What this means
Hospitals are able to prescribe a 340B medication to any of their patients — insured or uninsured — and in most cases can then retain the spread between the purchased and reimbursed price, with no reporting obligations and without the patient ever knowing.
Evidence suggests that the difference between what the hospitals pay and what they charge patients and insurance companies is significant. 340B hospitals are reimbursed on average three times what they pay for physician-administered medicines.
Some 340B medicines are so heavily discounted that covered entities can buy the medicine for one penny and then turn around and bill the patient and their insurer for the list price of the medicine.
Patients aren’t always benefiting from the 340B program despite the ever-increasing amount of discounts manufacturers provide through the program.