Hospital pharmacy
A 24-hour hospital pharmacy. Photo via Wikimedia Commons

The 340B Drug Pricing Program was created by Congress in 1992 to allow nonprofit healthcare providers with limited resources to ensure access to medicines for uninsured patients with acute and chronic health conditions and disorders.

Since its inception 26 years ago, the program has grown dramatically, and many now question whether it is due for an overhaul. Who is this program benefiting and how? Is the program so opaque that the rules are disproportionately benefiting certain kinds of providers? These are questions Congress must address.

It’s o question the 340B program has benefited many at-risk clinics and the patients they serve, lowering the cost of pharmaceuticals to patients by 20 to 50 percent. Since its creation, both the number of people being served and the type and number of providers allowed to participate have grown.

The program could benefit from a number of changes. In 2017, Rep. Scott Peters from San Diego co-sponsored the 340B PAUSE Act, a bipartisan effort aimed at expanding required basic data reporting to all 340B participants, including so-called disproportionate share hospitals serving low-income patients.

We have seen how valuable the 340B program is to hemophilia clinics and the Ryan White HIV/AIDS Program, where strict reporting shows us just how the revenue gains from discounted drugs are reinvested into patient care and treatment. For this vital program to continue, we must ensure that all 340B entities, especially disproportionate share hospitals, have similar rigorous reporting requirements, showing how and where they are using these dollars to the benefit of low-income and uninsured patients.

First, we need greater transparency. Currently, we don’t know how 340B dollars are reinvested by disproportionate share hospitals. We have no way of knowing how much is utilized for direct and indirect patient care, hiring medical professionals, or other services. Also, given the growth of high-deductible health insurance plans, we need to fully understand whether and how hospitals are using the 340B revenue to help reduce out-of-pocket costs.

Second, we must bring an end to duplicate discounts, which are the direct result of a conflict between two federal programs — Medicaid rebates intended to benefit state Medicaid programs, and 340B discounts intended to benefit eligible safety-net health care providers, the so-called “covered Entities.” There is a substantial overlap in prescription eligibility between the two programs, making it possible for both state Medicaid programs and covered entities to claim a discount for the same purchase. We must investigate ways to utilize technology to prevent these overlaps, which the federal government has thus far failed to address.

Third, Congress should stop allowing chain drug stores, pharmacy benefit managers, and third-party administrators to shield how much money they make from the 340B program.

The vision of Rep. Peters and others committed to programmatic transparency should be applauded. The current program lacks transparency and should utilize technology to undergo systemic changes that reduce waste and provide more efficient use of resources.

Jeffrey R. Lewis is the president and CEO of Legacy Health Endowment in Turlock.

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