Common Sense Reforms Needed to Maintain Program for the Uninsured

At the end of the day, everyone involved in America’s health care industry should be united around one goal, saving lives. Strip away the politics, policies, regulations and costs and our collective mission should be providing the best possible care and medicines to those in need, regardless of their economic situation.

In 1992, Congress wisely created a program to do just that. The 340B Drug Discount Program was intended to help vulnerable or uninsured patients gain access to life-saving prescription medications by ensuring that both hospitals and drug manufacturers shared in the cost.

Unfortunately, the program has strayed far from its original mission. Too often today, large hospitals and health systems—not patients—are reaping the benefits by exploiting various profit-friendly loopholes. And the rest of us are picking up the tab in terms of higher insurance premiums and overall healthcare costs.

After more than twenty years, it is time for Congress to take another look at 340B to ensure it is operating as intended and helping those who need it most. No longer should this program be seen as a major revenue driver for hospitals. We commend the House Energy & Commerce Committee for calling a special hearing on 340B this month and encourage members to call for greater transparency, accountability and oversight in the program.

With the expansion of Medicaid and the implementation of the Affordable Care Act, Kentucky has decreased indigent care spending by 60%, according to a recent study produced performed by Deloitte for the Commonwealth of Kentucky. At a time when Kentucky’s uninsured population has decreased so dramatically, a program like 340B—which is designed to help the uninsured—should be decreasing dramatically as well. But for some logic-defying reason, it is on the rise.

Growth in 340B results from a variety of factors, including the increasing number of qualifying hospitals, hospital acquisitions of physician clinics, and a new policy allowing discounts to be shared with outside contract pharmacies.

Currently, about one-third of all hospitals qualify for 340B, including many of the largest hospital systems in Kentucky. This is a far cry from the program’s original intent to serve a few safety net hospitals that primarily serve the uninsured.

As hospitals purchase physician clinics to obtain additional 340B discounts, patients often see no benefit. Further, studies from Berkeley Research Group, Avalere Health and the Moran Company have found that care provided in hospital-acquired clinics translate into higher costs for insurers and patients down the road.

Another problem was born out of a 2010 revision allowing hospitals to profit off 340B without providing any guaranteed benefits to their patients. This change allows hospitals and other 340B entities to obtain 340B discounts for prescriptions filled at an outside or “contract” pharmacy. The purpose of this change was noble—to help small clinics without in-house pharmacies—but it has been abused by hospitals and large pharmacies who are reaping windfall profits while providing little if any tangible benefits to their patients.

340B safety-net clinics are far less likely to benefit from the contract pharmacy program because of their size and because they are typically required to reinvest discount revenue into services for vulnerable patients. The larger 340B hospitals are not subject to the same requirements.

In its current form, 340B is simply not sustainable nor is it fair to those who are trying to adhere to its true intent. Kentucky’s life science community supports 340B and wants to ensure its long term viability as a tool for helping a vulnerable population access prescription medicines.

We simply want all sides to play fair and treat the program as Congress intended.

We encourage Congress to recognize that the current system is in need of repair and to enact sensible reforms that will enable 340B to continue helping those in need long into the future.

Dr. Kyle Keeney: Dr. Kyle Keeney is Executive Director of the Kentucky Life Sciences Council. KLSC works with industry and government leaders to promote effective legislation that encourages investment and innovation in the sciences.