Ensuring 340B Works for Vulnerable Patients

For more than two decades, biopharmaceutical research companies have provided discounted prescription medicines through the 340B program to help vulnerable and uninsured patients access the treatments they need to live healthier lives. Unfortunately, while some 340B facilities, like community clinics, are providing needed care to the uninsured, a lack of accountability and oversight has fueled skyrocketing growth and undeniable abuse of the program in recent years. Of utmost concern is mounting evidence that suggests needy patients in certain settings may not directly benefit from the expanded program.

Congress established the 340B Drug Discount Program in 1992 to provide discounted prescription medicines to certain health care facilities that serve large numbers of uninsured and vulnerable patients.   Over the years, some entities established thousands of contracts with outside for-profit pharmacies who benefit from these arrangements. Hospitals purchase the discounted medicines while the pharmacies dispense them; profits are shared between the hospital and the pharmacy. In some cases, patients may not be benefiting from these discounts.

This week, the Alliance for Integrity and Reform of 340B (AIR 340B)—a coalition of patient advocacy groups, clinical care providers and biopharmaceutical innovators that include PhRMA — released a new white paper analyzing rapid contract pharmacy growth in the 340B program. These arrangements, which have grown by more than 1,200 percent in three years, allow covered entities like qualified hospitals to sign contracts with for-profit retail pharmacies to dispense medicines acquired at a 340B discount. The original justification for these arrangements was to allow underserved, uninsured patients access to needed medicines at a local pharmacy close to home.

However, recent studies call into question whether the expanding 340B contract pharmacy program has significantly improved access for uninsured patients. This is particularly concerning as evidence shows that some contract pharmacies do not know whether or not patients are eligible for the 340B discount when they pick up their prescriptions. As a result, uninsured patients may not get discounts on the medicines dispensed by contract pharmacies.

Further, research shows that many 340B contract pharmacies are not located in low-income areas, calling into question whether contract pharmacies are truly located in the appropriate areas to serve high levels of patients with unmet medical needs.  In one case, almost 75 percent of a pharmacy chain’s stores participate in at least one contract pharmacy network and less than 15 percent are located in zip codes with an average income below 200 percent of the poverty line.

With nearly three times more contract pharmacy relationships in existence than projected for 2013, it is time to reexamine whether patients are truly benefitting from the program’s dramatic growth. If contract pharmacies are redirecting discounts for purposes other than improving access and expanding services for uninsured and vulnerable patients, Congress and the Health Resources and Services Administration should put a stop to it.

New findings add to the growing body of research that indicates the 340B program has deviated from its core mission.  Earlier this year, research from Avalere Health found that many 340B hospitals are providing very little charity care (free or discounted care to low-income populations) and yet the hospitals are tapping into 340B discounts. In fact, the data showed that charity care represents one percent or less of patient costs for approximately one-quarter of 340B hospitals. It also found that two-thirds of 340B hospitals provide less charity care than the average U.S. hospital.

While some 340B facilities, such as community clinics, have been responsible stewards of this important patient benefit, there is too much evidence of misuse and abuse by hospitals to look away as the program spirals into disrepair. Immediate Congressional and Administrative oversight and reform is necessary to ensure the 340B program is sustainable for vulnerable and uninsured patients for years to come. We remain committed to working with our partners and other stakeholders for the benefit of patients.


John J. Castellani is the President and CEO of Pharmaceutical Research and Manufacturers of America (PhRMA)

Morning Consult