New Pharmacy Arrangements Cause Harm to Drug Program

By Kyle Keeney, PhD

One of the most important functions of our elected leaders in Washington is ensuring that the programs they create are working as intended. Without proper oversight and periodic maintenance, even the most well-intentioned of programs can run astray.

Such is the case with 340B, a little-known health care program Congress created decades ago to help uninsured patients access the medications they need to manage and maintain their health. This program was originally created as a vehicle for drug makers to provide medications at greatly reduced prices to a limited number of “last resort” hospitals and community health centers, mostly in rural and underserved areas. These medicines were then in turn given to patients at little or no costs. But then it drifted over time.

After years of working as intended, new interpretations and lax government oversight led to a massive and unintended increase in the size and scope of 340B. While this may not seem problematic at first, it turns out that bad actors like pharmacy benefit managers (PBMs) are the ones benefitting from the program’s unnecessary growth. And in many cases, they aren’t passing those benefits along to patients.

Now, as one leg of the 340B stool—the drug makers—calls for more oversight and reform to help ensure the program’s future, they are being met with fierce attacks and misinformation from those who want to protect what has become a major revenue source. A recent opinion piece in published in The Wall Street Journal (The Federal Program That Keeps Insulin Prices High) offers an excellent take on just how significantly 340B is being misused, and sometimes to the detriment of those it was meant to serve.

The Alliance for Integrity and Reform of 340B (AIR340B) notes that for the past decade, “key federal agencies, including the Government Accountability Office (GAO) and the Department of Health and Human Services Office of Inspector General (OIG), have called for better oversight and regulation of hospitals and so-called contract pharmacies, which are now dominated by large for-profit corporations that have been profiting off 340B without always delivering benefits to needy patients.”

Contract pharmacy arrangements within the 340B program have been a persistent source of concern. According to a 2018 report by GAO, the majority of vulnerable or uninsured patients are not receiving 340B savings on their medications at contract pharmacies, which have become increasingly common as they acquire more and more independent and smaller, regional pharmacies.

The life sciences industry, which includes our nations’ biopharmaceutical researchers and manufacturers, fully supports the original intent and ongoing success of the 340B program. Many patients in rural and underserved areas have benefited tremendously from its proper use—and that’s not something any of us want to see go away. What we do not support is taking advantage of this well-intentioned program for anything other than helping patients access their medications.

340B must be allowed to operate as it was originally intended: helping eligible patients and communities via true safety-net facilities. Now more than ever, as we continue in our battle against a worldwide pandemic, we must protect access to life-saving medications. But that can only happen when everyone agrees to play by the same rules, with effective oversight and in the best interests of the people and communities they serve. 

Dr. Kyle Keeney is the Executive Director of the Kentucky Life Sciences Council