At any one time in Washington, D.C. there are thousands of individual battles going on over hundreds of issues large and small. Most of the battles these days seem to form along partisan red and blue lines — but not always.
Recently, a program cryptically named “340B” has become subject of one of those battles.
340B is a government-mandated program that ironically began as a volunteer effort by the drug manufacturers. Back in the early days of the AIDS epidemic emerging new drugs and the “cocktails” used to fight HIV were prohibitively expensive. Many patients were uninsured. So manufacturers began a program of selling such drugs to treat low-income and uninsured patients at deep, deep discounts.
Under Obamacare, though, the program was expanded. According to a recent article in Forbes,
In 2009, Talyst, a consultant to hospitals and contract pharmacies began lobbying for a rapid expansion of the program recognizing, in the words of Talyst, “There is no requirement to pass the savings on to patients directly.” Companies soon discovered it was legal, under certain parameters, to take in drugs at a discounted rate and charge insurers for the full cost of the drugs without passing the discounts on to patients.
This particular battle pits big Pharma and the “medical-industrial complex” of hospitals and chain pharmacies against each other.
Pharmaceutical folks claim that some hospitals are too liberal in their interpretation of eligibility and proper utilization of the 340B category of drugs. Um yeah.
They allege that the program has morphed into a low-cost ATM for large hospitals because Congress failed to nail down exactly what “indigent or uninsured” really meant. (Congress really should stop outsourcing their jobs to unelected agency rule-writers…..)
The hospitals claim they are in the right and are using the program within the law. They also cite the vagueness of the definitions in the statute as justification. Further, they claim that the use any “profits” from 340B to cover costs for “uncompensated care” – in other words, to balance the books on losses.
Just recently some 500 hospital and health system CEOs signed a joint letter to Congressional leadership calling for preservation of the program, claiming, “In some instances, the program allows us to keep our emergency rooms and hospital doors open.”
Pretty sure the program was not intended to balance the books.
And let me just say right here – again – that “legal” doesn’t necessarily mean “right.”
On the other hand, many publications including Forbes and “Managed Care” have hit hospital abuse of the program pretty hard. One publication dubbed 340B as “honest graft” and “…a get-rich-quick scheme helping investors, financial institutions and corporations.”
The Charlotte Observer reported that Duke University Hospital cleared a tidy $69.7 million profit from selling 340B drugs to its patients, 67% of whom were covered by commercial insurance with only 5% totally uninsured. $70 million will keep a lot of “hospital doors open.”
Follow the money. Legal loopholes were found and exploited and now, we have another government mandate where costs exploded 770% in five years.
The real losers here are the truly needy who could benefit from a program like this – and the rest of us who get to pay the costs passed on so hospitals can “cover losses.” And we wonder why we can’t get a handle on healthcare costs…..
Congress is finally taking a look and good for them. Both Democrats and Republicans see problems here. But….well, Congress.
I won’t hold my breath for a speedy resolution.