When a government program to provide help to the needy turns out to be well-targeted, effective, and efficient, most Americans are eager to stand up and applaud. When such programs deteriorate over time because of abuse, neglect, and poor oversight, then it’s up to taxpayers to call for reform.
We are at just such a time with the 340B drug pricing program. It’s not a household name, but the 340B program touches an enormous share of American hospitals — about 40% of them participate, according to a government report issued in July 2015. The program’s growth has been explosive over the last two decades, and with that growth have come participants who are gaming the system for their own enrichment.
Owing to the limited oversight of the program and the fact it has grown far beyond its original legislative intent, the 340B program isn’t being carefully policed for its efficiency. As a result, some of the participating hospitals and pharmacies take big discounts on pharmaceutical drugs and then sell those same prescriptions to patients at full price. That defies the intent of the program, which is intended to get discounts into the hands of patients who need them.
Without proper Congressional oversight, misbehavior has crept in. It offends our sense of fairness that a hospital or pharmacy would take a big price cut on behalf of patients without ever passing it along to the patients themselves. It’s also dangerous since it endangers the integrity of a program meant to help the vulnerable.
The 340B idea is to provide targeted assistance to needy patients, not a back-door way for hospitals to pad their profit margins. We need reform to the system to drive it back to its principled beginnings. Eligibility for 340B should be limited to those hospitals that actually serve the patients who need help, and it should apply only to prescriptions serving those patients.
Many of the participants in the 340B program are doing good work, honestly applying the tools of the program to suit the needs that Congress had in mind. But some participants are clearly taking advantage of ambiguity in the program’s language, its explosive growth in recent years, and the minimal oversight actually being applied. It’s time for that bad behavior to stop.
Action needs to start with Congress taking a fresh look at 340B. A reset is in order: Tell the hospitals and pharmacies that 340B is in place to protect the best interests of needy patients, not to pad their bottom lines. Remind them that it’s a program intended to help doctors and patients work together towards treatment, not as a way to hide the true cost of charitable care. And make it clear that abuse of the program will not be tolerated, since it penalizes honest care providers and could push them out of the marketplace.
The 340B program provides a helpful safety net. That safety net shouldn’t become a cover for abuse and accounting trickery. Congress should set the record straight so that a good program can stay.