Commentary: 340B Drug Pricing Program Needs a Federal Fix, Not a Free Pass for Hospitals

Op-Ed by NCL CEO Sally Greenberg on Times Union

Too many hospitals take advantage of 340B, intended to make medications affordable for low-income patients. A New York proposal would make things worse.

Millions of New Yorkers are one surprise hospital bill away from falling into medical debt. Over 100 million Americans have had or currently have medical debt. Too often, that medical debt is pursued aggressively by hospitals participating in the 340B drug pricing program, a federal initiative that ensures low-income and uninsured patients have access to affordable medications.

All the while, many of those same hospitals are manipulating 340B to boost profits — and New York legislators seem poised to pour fuel on that fire.

The 340B program allows eligible hospitals and clinics to purchase outpatient medications at discounted prices to ensure patients have access to affordable treatments. But increasingly, 340B drug discounts are not being passed along to those who need them most. The problem is there’s no federal requirement for hospitals to pass 340B savings on to patients — or even to report how those discounts are used. As a result, savings from discounts flow into “nonprofit” hospitals with little oversight and zero guarantees that low-income, uninsured and otherwise vulnerable New Yorkers see any benefit.

That leaves a very big, very expensive question: Where’s the money going?

A number of hospitals in New York and across the country have turned 340B into a billion-dollar cash cow. Some New York hospitals charge patients full price for medicines purchased at steep discounts, provide minimal charity care and aggressively pursue unpaid medical bills from the very patients the program was intended to protect.

340B health care providers statewide and the pharmacies they contract with are falling short on supporting underserved communities. New York hospitals divert less than 2% of their operating expenses to charity care, lower than the national average. Many of their partner pharmacies are also located in high-income areas, far from the patients who rely on the program to access and afford their medications.

To add insult to injury, New York state legislators are considering measures that would enshrine the flaws of the 340B program and while failing to address the need for transparency and accountability. These bills will enable continued abuse of 340B and won’t help ensure that patients benefit from drug discounts.

New Yorkers won’t like this idea. Recent polling from the National Consumers League finds that 76% of adults in New York are concerned about aggressive medical debt practices by 340B hospitals, and 77% want stronger transparency to ensure savings reach patients, something only Congress can address.

The U.S. Senate Health, Education, Labor and Pensions Committee recently held a hearing examining 340B growth and its impact on patients, with bipartisan interest in increasing transparency of 340B revenues. That’s a step in the right direction. This hearing follows additional evidence from the Congressional Budget Office, which found that the program’s design encourages behaviors that increase federal spending, such as prescribing higher-cost drugs, expanding hospital-affiliated clinics and consolidating health care services.

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