Commentary: Drug discount program aiding profits not patients

Reforms are needed to a 1992 law intended to keep medication costs low for low-income patients.

By BJ Cavnor

It may surprise you to learn that recent reports suggest nearly 1 in 4 patients are unknowingly overpaying for their medications. A painful statistic, especially when so many people continue to struggle to afford health care.

Even more surprising is learning that we have had a solution in place since 1992, the federal 340B Prescription Drug Discount Program.

The 340B program was created with the noble goal of helping health care providers that serve high levels of uninsured or vulnerable patients to reduce their outpatient prescription costs. This was accomplished by requiring drug manufacturers to discount prescription medications sold to eligible providers, with the intent of having the accrued savings directly benefiting patients in need.

It is critical that the 340B program serve as a lifeline for indigent patients. The program should continue to provide low-income patients with relief, but analyses completed by the Government Accountability Office and Office of the Inspector General highlight fixes needed with some of the program participants, namely “disproportionate share hospitals,” in order for patients to benefit.

The GAO reported that patient eligibility definitions for the 340B program vary between participating hospitals. At the same time, OIG found discrepancies in program implementation, which can be traced to the expanded use of contract pharmacy agreements with existing hospital networks. The number of these agreements skyrocketed between 2010 and 2013, rising by an astounding 1,245 percent.

When applicable hospitals contract to outside pharmacies to provide services, the pharmacies sometimes do not ensure 340B medications are being distributed at a discounted price. In documented instances, patients are charged full price for medications, meaning, the pharmacy and hospital profit by pocketing the difference between the discount and what the patient paid.

This matters because the out-of-pocket cost of medication, (the price we pay) is the single greatest barrier to patient adherence, resulting in more than 10 percent of all hospitalizations in the United States, and adding in excess of $289 billion to all of our health care expenses. Patients in need shouldn’t be forced to make tough tradeoffs because of high out-of-pocket costs for medications, one of the primary problems that the 340B program was created to fix.

Specialty medicines used to treat cancer are a particularly lucrative profit center for this type of unaccountable network. In 2015, the GAO reported that Medicare Part B claims at 340B outpatient clinics were significantly higher than at non-340B locations. In addition, a white paper by Milliman found that 340B hospitals are prescribing more drugs, and more expensive drugs, to all of their patients.

These findings are even more troubling coupled with the fact that the 340B program is not fulfilling its core mission. A study published in The New England Journal of Medicine found that financial gains for hospitals under the 340B program have not been associated with clear evidence of expanded care or lower mortality among low-income patients.

While patients foot the bill through higher co-pays, some profit-seeking bad actors in the system pad their bottom lines with the discounts. Fixes are needed to ensure that the program helps needy patients access the care they need.

Fortunately, there is a policy solution currently being considered in Congress. The 340B Helping Ensure Low-income Patients have Access to Care and Treatment (HELP ACT), has been introduced by Sen. Bill Cassidy, R-Louisiana, which means our delegation in Washington has an opportunity to make a difference.

The HELP ACT would improve and strengthen reporting requirements, so the public would know that discount dollars are being used for their intended purpose of helping low-income patients.

Moreover, the legislation would pause the enrollment of new hospital participants in the 340B program to allow these fixes to be put into place. The HELP ACT would, however, exempt critical access hospitals, rural referral center, and certain children’s and cancer hospitals, and all HRSA grantees — ensuring that patients relying on these services continue to receive care.

Modernizing the 340B program is as important in principle as it is in practice. Needy patients should have access to medication and treatment. In too many cases, profit incentives in the program have made accessing medication more expensive for the patients least able to afford it, not less. Congress should take steps to curb these abuses and ensure the program can help the people who need it most.

BJ Cavnor is executive director of One in Four Chronic Health, a patient advocacy organization in Washington and Oregon.

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