Few government programs produce as much good for so many people with as little cost to taxpayers as the 340B drug pricing program.
The concept is simple: Pharmaceutical manufacturers sell outpatient drugs at a discount to hospitals and other providers that serve large numbers of low-income patients. Hospitals use the money they save on drug purchases to support not only affordable medications for indigent patients, but also to provide a broad variety of services to the vulnerable: community-based primary care, cancer clinics and chronic disease management, for example. Savings from 340B free up resources for vulnerable patients that a hospital might otherwise spend to buy medications.
The 340B program really is that simple—and a simply indispensable part of the patchwork support that essential hospitals rely on to meet their commitment to those in need.
The program's ability to accomplish so much for a modest administrative cost makes discussions to scale back the program particularly frustrating and ill-advised. Among the program's biggest detractors are pharmaceutical companies. With an eye toward reclaiming revenue they now provide as 340B discounts, drugmakers have tried to paint the program as wasteful and misdirected.
But to weigh the merits of these claims, you need only understand two key features of the program:
First, 340B discounts are not available to just any provider. Only certain hospitals, community health centers, AIDS clinics and other entities that meet a statutorily defined threshold of care for low-income patients may participate. Far from being misdirected, the program's savings reach precisely those providers Congress sought to help—and produce the intended result: to help hospitals stretch scarce resources.
Second, to the claim of wastefulness, the program involves no flow of federal dollars to hospitals. The savings from 340B comes through the discounts manufacturers provide. In fact, the program saves taxpayer dollars by helping hospitals that care for the poor stretch the limited supplemental funds they do receive from state and federal governments.
For these reasons and others, we must keep 340B savings with the hospitals that serve our most vulnerable patients. Allowing these savings to revert to drug companies, or to go toward other uses, would pull the thread of the 340B program and unravel the fabric of essential health services for entire communities.
Yes, entire communities. Essential hospitals—those that commit to caring for low-income and other vulnerable patients—also provide communities with highly specialized care often unavailable from other hospitals: Level I trauma and neonatal intensive care, burn units, disaster preparedness and emergency response, and other lifesaving services. These safety net hospitals prepare the next generation of health professionals, training on average 12 times as many physicians as other teaching hospitals. And they provide public and population health—sometimes serving as the public health department for the local community.
Essential hospitals also use their 340B savings to support clinics that provide access to outpatient services for people who might otherwise lack the resources to see a physician. By doing so, the hospitals make good use of their savings to deliver comprehensive, coordinated care through expansive outpatient and primary-care networks.
These are the services we put at risk if essential hospitals lose their 340B program savings. Our hospitals operate with the narrowest of margins or at a loss, so every dollar saved counts.
The 340B discounts take on particular importance when you consider the escalating cost of drugs: Recent examples include a promising new hepatitis C drug for more than $1,100 a pill and a top cancer drug regimen that costs more than $100,000 a year. These are unsustainable costs, not only for low-income patients and the essential hospitals on which they depend, but for local, state and federal governments, and all taxpayers.
In the end, we face a choice: side with communities by keeping 340B discounts where they belong—with patients and safety net hospitals—or chip away at support of care for the vulnerable and put everyone at risk. Returning an incremental profit to drugmakers or using 340B savings for other purposes equates to more hospital cuts—and higher costs, poorer health and lowered productivity in communities across the country.
