Keystone Today

Spending on prescription drugs purchased at participating health care providers through the federal 340b drug discount program increased 19% annually between 2010 and 2021.

That’s according to a Congressional Budget Office (CBO) report released June 17.

“Eighty-eight percent of the growth in 340B spending from 2010 to 2021 can be attributed to spending on drugs prescribed by hospitals and their affiliated off-site clinics,” said a presentation on the report provided by Rebecca Sachs and Joshua Varcie of the CBO’s Health Analysis Division.

Pennsylvania has 68 hospitals participating in the 340b program, which is a federal initiative that enables eligible hospitals and healthcare organizations to purchase outpatient medications at significantly discounted prices.

Established in 1992 and administered by the Health Resources and Services Administration (HRSA) the program aims to provide financial relief to healthcare providers serving vulnerable populations, allowing them to stretch their scarce resources and reach more eligible patients.

Hospitals participating in the 340B program can use the savings to fund essential services and programs, such as free or low-cost medication assistance, expanded access to healthcare, and community outreach initiatives.

Participating hospitals, however, “often extend their 340B discounts to clinics in well-off communities, where they can charge privately insured patients more than those on Medicaid,” reported the Wall Street Journal.

“In some cases, the program appears to be bolstering profits in well-off areas more than it is underwriting services in less-privileged neighborhoods,” said the Journal article.

A national healthcare policy analyst said “we don’t actually know” if drug discounts are being passed to patients by Pennsylvania hospitals participating in a federal drug discount program.

“The real problem is that we don't know if they're making a huge profit, where those profits are going, or if those funds are actually going to care for the low income indigent population,” said Naomi Lopez, senior fellow at the Goldwater Institute, reported Keystone Today in April. “We're definitely looking at billions of dollars, and we don't actually know because of the lack of transparency and accountability in the program.”

Lopez referenced a September 24, 2022 New York Times article that reported on how much a hospital in Richmond, Va. profited off a cancer drug.

"Thanks to 340B, Richmond Community Hospital can buy a vial of Keytruda, a cancer drug, at the discounted price of $3,444, according to an estimate by Sara Tabatabai, a former researcher at Memorial Sloan Kettering Cancer Center," reported the Times. "But the hospital charges the private insurer Blue Cross Blue Shield more than seven times that price — $25,425, according to a price list that hospitals are required to publish."

"That is nearly $22,000 profit on a single vial. Adults need two vials per treatment course," the article said.

Lopez said this is one example of not knowing where the money is going once health care providers receive their discounts. 

"In many cases, we're all getting fleeced and the people that are impacted the worst are those individuals that would benefit, the low income individuals, the indigent population that would benefit from having better access to low cost treatment," said Lopez.

The U.S. House Energy and Commerce Oversight and Investigations Subcommittee held a June 4 hearing on the 340b program. U.S. Rep. John Joyce (R-PA-13) said in during the hearing that the program’s growth has created “misaligned incentives” that are driving up patient costs. 

“This growth has created misaligned incentives across the entire health care system, leading to further consolidation that drives up prices for every patient,” said Joyce.