Dean Clancy, a senior health policy fellow at Americans for Prosperity, said hospitals are using the 340B drug program “as a cash cow” to increase profits for themselves instead of increasing savings for patients.
“Today, despite its purpose, hospitals are using the program as a cash cow, racking up profits without passing the savings on to patients, as Congress intended,” Clancy said in a recent Americans for Prosperity blog post. “According to one comprehensive study, discounts reach as few as 1.4% of patients.”
“At a minimum, Congress should revamp the program to live up to its original purpose as a safety net,” Clancy said. “Ultimately, we need to reform health care to be more affordable and accessible. Let’s remove barriers and empower consumers to unleash the world-class innovation — and generous safety nets for the vulnerable — that only free markets can deliver.”
The 340B drug pricing program was created in 1992 to support uninsured or low income patients by enabling 340B covered entities like hospitals or health care organizations to purchase drugs for eligible patients at lower costs, passing on those savings to the patients. Since inception, there has been little oversight added to the program, leading to hospitals and health care institutions pocketing the savings instead of lowering costs for patients
The 340B ACCESS Act was proposed to address these issue, and would add new requirements for transparency and eligibility to protect 340B patients. The legislation provides a clear definition of which patients are 340B eligible as well as a detailed list of requirements for hospitals to be eligible for participating in the 340B program.
“The estimated dollar value of total 340B drug sales has grown from $7 billion in 2012 to $54 billion in 2022,” Clancy wrote. “Tellingly, from 2018 to 2023, while non-340B sales grew by 41.4%, 340B sales grew by 129.4%, more than three times as fast.”
A 2022 Milliman analysis revealed that outpatient medicine costs at 340B hospitals are over 150% higher than at non-340B hospitals. These larger facilities, found more often in affluent areas, provide less charity care than non-340B hospitals.
“340B sales now represent more than 7% of all drug sales in the United States. And there’s evidence the program’s explosive growth is driving up Medicare Part B premiums, which, if you think about it, means seniors are subsidizing hospital corporations,” Clancy said.
Americans for Prosperity is an advocacy organization focused on freedom and opportunity for all. The organization advocates for solutions based on proven principles to tackle several industries and challenges across the nation.
