Reforming 340B vital for affordable medication for low-income patients

When the 340B drug pricing program was established in 1992, Congress intended for the program to help low-income and uninsured patients with their prescription drugs. The pharmaceutical companies whose drugs are covered by Medicaid are required to participate in the program, offering discounts for drugs to patients on average at 25 to 50 percent of the wholesale acquisition cost.  

Unfortunately, today, the 340B program is failing those it was meant to serve. There is ample evidence that special interests have hijacked the program and exploited its loopholes for their own profit. 

Take for example the fact that the 340B program has increased in size substantially since the Affordable Care Act passed in 2010, allowing 340B hospitals to contract with unlimited pharmacies to reach more low-income communities. Due to a lack of accountability in the program, the result of the expansion was hospitals profiting off the program with no benefit to their patients.

Studies clearly show that hospital participation in 340B has not improved health outcomes for low-income patients. A July 2023 report on the location of 340B disproportionate share hospitals (DSH) shows only 35 percent are located in medically underserved areas, exacerbating the issues caused by 340B hospitals siphoning resources from low-income areas to benefit wealthier regions.

Due to a lack of transparency and oversight, bad actors continue to manipulate the system. Consumers and taxpayers pay for the diversion and waste of 340B funds through higher drug prices, taxes and premiums. 

A 2022 New York Times article about a Richmond, Va. hospital, owned by Bon Secours, found that instead of reinvesting profits from 340B drug sales into its DSH and improving patient care, the money was invested in facilities in the city’s wealthier neighborhoods. Dr. Lucas English, who worked in the hospital’s emergency department, said, “Bon Secours was basically laundering money through this poor hospital to its wealthy outposts … It was all about profits.”  

This exploitation not only undermines ethical standards but also jeopardizes the health care safety net for millions. 

Clearly defining who is a 340B patient and limiting eligibility to only low-income patients is crucial to the future of the program. Pharmacies must check eligibility before receiving a discount. And, patients must be under the care of a physician at the 340B hospital. Covered entities and contract pharmacies must be prohibited from profiteering from 340B discounts. These commonsense measures will prevent multiple covered entities from claiming the same benefits under the 340B program.

While the House Energy and Commerce Committee passed H.R. 3290 on May 24, 2023, to improve 340B program transparency and the Oversight and Investigations Subcommittee held a hearing on 340B on June 4, 2024, no such progress has been made in the Senate. The most prominent effort there is being led by the bipartisan Gang of Six. They released a discussion draft on Feb. 2, 2024, and there were reports that turned out to be incorrect that legislation was going to be introduced before the August recess. 

The senators should act quickly following their return and move the bill to the floor of the Senate before the end of the 118th Congress. Further delays in acting on 340B reform are unacceptable. Taxpayers and patients should not continue to lose while special interests continue to abuse the program and win.

It’s time to get back to work. Congress must swiftly consider and enact legislation to reform the 340B program and reclaim its original purpose to provide affordable medications to those most in need. Implementing these reforms ensures that 340B discounts directly benefit patients rather than enrich special interests. The health and well-being of millions of Americans depend on fixing the mess in 340B.

Tom Schatz is president of the Council for Citizens Against Government Waste.