Dr Peter Bach Examines the Problems of the 340B Drug Pricing Program

While the 340B Drug Pricing Program was designed to help facilities that take care of impoverished patients with low-cost drugs, what the program has morphed into is almost the opposite of what it was intended to do, said Peter Bach, MD, MPP, director of Memorial Sloan Kettering's Center for Health Policy and Outcomes.

Transcript (slightly modified)

What are the current problems with the 340B Drug Pricing Program?

The 340B program was designed to help facilities that take care of impoverished patients and patients with limited means with low-cost drugs. And the program has shifted from that objective to one that is being used by many hospitals where a small fraction of their patients are poor in the hospital and then they are able to obtain drugs for outpatients who aren't necessarily poor. And what we've seen is a steady expansion. Because hospitals can get these discounted drugs for outpatients, they have expanded into communities where there are wealthy patients—sort of antithetical to the objective of the program.

Who should be involved in the discussions on transforming the 340B program?

This is a government program so I think the important thing is to figure out what we're trying to optimize and I think what we're trying to optimize is access and care. And we're also trying to contain healthcare costs. If you put in a mandatory discount program where all the difference between the discount and the retail reinsurance or insurance rate is captured by the hospital, all you'll get is expansions by the hospitals participating in the program and expansions into more clinics. And that will just add another deadweight cost to healthcare—the exact opposite of what we want to do.

But this is a regulatory issue. The Health Resources and Services Administration administers this program, they should have full authority to identify which patients are eligible and which drugs are eligible. And I honestly think that if drugs are priced appropriately already, they shouldn't be further discounted.