The 340B Program and Healthcare Reform

The 340B program was originally designed to assist hospitals that treat under- or uninsured patients in receiving discounted pharmaceutical drugs. Now, the federal subsidy program is getting a second look.

Safety Net Hospitals for Pharmaceutical Access, who represents more than half of participating 340B hospitals, recently made recommendations for the program. An estimated one-third of US hospitals are participating in the 340B program, which has inclined the safety net hospital group to offer advice in curbing some hospitals’ misuse of the program.

340B hospitals receive medicines from pharmaceutical companies at up to 50% below market prices. If a pharmacy refuses to participate in the program, they are denied Medicaid reimbursements for their drugs, motivating most companies to participate. The discounts are then purported to be passed on to those under- or uninsured patients, who previously could not afford their medicines at full price.

However, critics of the program say that some hospitals are upselling the discounted drugs to Medicare patients and private insurers.This drastically affects patients who would then not be receiving any direct benefit from the program.

“The 340B program strengthens the healthcare safety net, allowing vulnerable patients to access medicine and healthcare services they need to stay out of the hospital,” Ted Slafsky, SNHPA President and CEO, said in a recent statement. "Without the 340B program, many safety net hospitals would have to limit services or even close their pharmacy doors. As a result, patients would lose access to healthcare and communities would suffer.”

Wayne Winegarden, PhD, Sr Fellow in Business and Economics with the Pacific Research Institute and a Contributing Editor to EconoSTATS, says improving programs like 340B are critical for healthcare reform. When implementing new policy such as the Affordable Care Act, programs like 340B must be reconsidered.

“Effective healthcare reform must eliminate these impediments that are diminishing the incentives for innovation and productivity growth while creating policies that empower patients to control their own healthcare decisions,” Dr Winegarden said in a recent article.” With respect to 340B, a more efficient healthcare system also creates the necessary environment to help those individuals who need assistance in obtaining healthcare services.”

Dr Winegarden stresses that while programs like 340B have good intentions, they are poorly executed. Until they are reassessed, they will continue to impact the growing costs of the healthcare system and worsen its efficiency, continuing to affect those individuals who need the financial assistance most.

Around the Web

Hospitals Look to Reform 340B Drug Discount Program [Modern Healthcare]

New Report Underscores Importance Of Drug Discount Program For Treating Poor And Vulnerable Patients [SNHPA]

Government Mandates Don't Lower Health Care Costs [Forbes]