The list of government programs that provide free or low-cost care to millions of patients and don’t cost the taxpayers a dime is short.
In fact, it may be one line long. Since being signed into law in 1992 by President George H.W. Bush, the 340B drug pricing program has saved billions of dollars in drug costs for safety-net providers, allowing us to care for low-income and rural patients and communities.
The way 340B works is pretty simple. In order to participate in the Medicaid and Medicare drug programs, pharmaceutical manufacturers are required to provide discounts ranging from 13 percent to 23 percent on outpatient drugs sold to certain clinics, health centers, and public and non-profit hospitals that serve large numbers of low-income or rural patients.
The savings from those discounts are reinvested into expanding vital care for those patients and funding crucial community facilities. For many small rural hospitals, the 340B discounts are the difference between staying open and closing their doors.
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When Congress enacted the 340B program, it set out clear intentions: “To stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” Good news: The program is working as Congress planned.
A recent study by L&M Policy Research found that 340B hospitals provide a high level of care to low-income patients. These hospitals provide 60 percent of all uncompensated care — more than $26 billion a year — despite making up only 38 percent of all acute care hospitals in the country.
Here at JPS Health Network, 340B drug price discounts saved us approximately $50 million in 2017. That money goes directly to increasing access for more patients. Thanks to 340B savings, we can fund such important patient care efforts as the Care Connection program for homeless patients, home health services, and the community’s only Psychiatric Emergency Center.
And we can offer what otherwise would be prohibitively expensive medical services, such as cancer treatments, because we can purchase drugs at lower cost and pass those savings along to our patients.
Despite these successes, the pharmaceutical industry and its allies are pressing Congress and the Trump administration to cut the 340B program while making unfounded accusations of fraud and abuse in the program. Proposed legislation could lead to fewer 340B providers and therefore fewer patients eligible for help via discounted drug prices.
On Jan. 1, many 340B hospitals received Medicare drug payment cuts of nearly 30 percent. With drug prices still rising and concerns about low-income Americans losing coverage, the direction of this debate is troubling.
One of the questions raised on Capitol Hill is “how big is the 340B program?” At a March hearing of the Senate Health, Education, Labor, and Pensions (HELP) Committee, Chairman Lamar Alexander, R-Tenn., said: “If it’s one or two percent, well that’s just a tax on pharmaceutical companies that we’re spending for a good purpose.”
Total 340B drug discounts in 2015 were $6.1 billion, compared with $457 billion in total U.S. drug sales. In other words, the discounts were less than two cents on the dollar. The 340B program passes Senator Alexander’s test with flying colors.
Recently, a key congressional panel discussed possible 340B program changes that could limit participation by some hospitals serving low-income communities. Unraveling that safety net would have serious consequences for people living on the edge of poverty who struggle to pay the costs of their care while making ends meet.
The 340B program is working as Congress intended, and the need for it is just as great — or greater — than ever.
R. William Whitman is Senior Executive Vice President and Chief Operating Officer at JPS Health Network in Fort Worth.