An IV drip used in cancer therapy. Courtesy National Cancer Institute

By James M. Sinclair, M.D.

We never imagined that a little-known federal program would come to have such a big impact on our nation’s cancer care system. Known as 340B, this well-intentioned program extends large discounts on prescription drugs to certain hospitals and clinics that treat high numbers of uninsured, poor, or vulnerable patients. But good ideas don’t always go as planned. Today, rampant financial abuse of 340B by some big hospital corporations, many of which don’t provide much charity care, is hurting our nation’s cancer care system and the patients that rely on it.

The program requires drug companies to sell medicines to certain hospitals and clinics at steep discounts in order to participate in Medicaid. But despite hospitals making upwards of 50 percent profit margins on these drugs, they aren’t required to pass a penny of those savings on to patients. Instead, the hospitals can pocket the profits for new luxury buildings, executive bonuses, and other projects. And with no reporting or oversight requirements, no one has any idea where the money is really going.

Profits from 340B have given hospitals a clear financial incentive to aggressively expand and take over cancer care across the country, including right here in Southern California. That was the finding of a recent study in the New England Journal of Medicine and an exhaustive two-year investigation by the House Committee on Energy and Commerce. And it has long been the experience of independent, community oncology practices like mine, the California Cancer Associates for Research and Excellence network, or cCARE .

James M. Sinclair

Because independent community oncology practices aren’t eligible for 340B discounts, we simply cannot compete with the much larger corporate hospitals that use 340B profits to fuel consolidation and market dominance. Over the last decade this has driven local cancer care practices, where the majority of Americans are treated, out of business. In fact, nearly 400 practices have closed since 2008, with another 600 having been acquired by or become affiliated with larger hospitals. In California alone, 30 practices have closed and 26 have joined hospitals.

All of this means that cancer care that was once delivered close to patient homes, in the communities where they live and work, is now all too often provided in the less convenient and much more expensive hospital setting. In the San Diego region alone, cCARE’s five community oncology clinics treat 10,000 patients battling cancer every year, and that’s just one part of the extensive local network we maintain. Hospitals abusing 340B threaten the personal care that community oncology provides and the existence of practices like cCARE. That’s bad for patients and their families.

Fortunately, reform is on the horizon. Rep. Scott Peters, a Democrat representing central San Diego County, recently cosponsored a bipartisan bill called the 340B PAUSE Act. This measure would put a temporary hold on new hospitals from being able to enroll in the program and require them to report on common sense metrics, such as the amount of charity care they provide, how much they are being reimbursed, and the percentage of patients they serve who receive 340B drugs.

Lately there has been a lot of misleading hospital outcry about the impact that reforming the 340B program will have on their bottom lines and the care they provide. To that I say, much like Peters’ bill does, “Prove it.”

Without transparency and data to back the hype up, the hospital threats are just hearsay. In fact, a new study shows that all California hospitals actually stand to receive a 1.1 percent increase in Medicare payments this year because of changes to the 340B program that have already been implemented. We desperately need the transparency of the 340B PAUSE Act to give us the data and information we need to assess the program. Hospitals that are serious about doing the right thing by supporting patients should welcome a more transparent 340B program with open arms.

Peters should be applauded for having the courage to stand up to those large, corporate 340B hospitals that continue to rob patients of the local cancer care they count on. His legislation puts southern California closer to real, sustainable reform for this important program that can’t come soon enough.


James M. Sinclair, M.D., is a practicing medical oncologist in the California Cancer Associates for Research and Excellence provider network.

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