Playing the Blame Game on Drug Prices

As the pharmaceutical industry sinks into a protracted drug-pricing scandal, it’s scrambling to place the blame elsewhere. One target is a small but important federal program that helps hospitals care for the poor.

The 340B drug discount program has been with us for 25 years. It requires drug companies to supply discounted medications to public and nonprofit health providers that treat high numbers of needy patients.

You can see why Big Pharma doesn’t much like it.

The 340B program allows safety-net hospitals like ours to provide both medications and clinical care to patients who cannot afford to pay. Many have lost jobs (and health insurance) due to their illnesses. By the time we see them, these patients are often suffering from more advanced stages of illness.

While Big Pharma spends $100 million on an advertising campaign to restore its battered image, it’s tarring the 340B program as a driver of high drug prices. The industry is using the oldest public relations trick in the book: Repeat a talking point until it becomes “fact.”

The logic goes thusly: Since pharmaceutical companies must provide discounted medicines to 340B hospitals, they automatically raise prices on those drugs for everyone else to make up the difference. The problem? There are absolutely no data to back up the assertion. Even at a 20 to 50 percent discount to safety-net providers, drug makers often enjoy a sizeable profit. How much? We’ll never know because they guard that secret like the crown jewels.

The 340B program generates an estimated $4.5 billion of savings for all providers in the program, including community health centers, hemophilia clinics and Ryan White AIDS/HIV centers. This represents a paltry 1 percent of the $457 billion U.S. drug market. It’s not enough tail to wag the dog. Nor is it enough to cause market distortions.

But that is lost profit Big Pharma dearly wants back.

The industry has been busy scapegoating 340B hospitals through surrogates – particularly a small group of unhappy private oncologists.  These doctors are smarting from reduced insurance reimbursements and an ongoing shift of specialist care to the hospital outpatient setting.

Certain chemotherapy drugs are among the most expensive in America. A course of Omacetaxine for leukemia costs $176,000 per year. Ibrutinib for lymphoma runs $165,000. The prices are truly outrageous. And they far exceed the ability of needy patients to pay.

We work for safety-net hospitals and it’s our mission to treat all patients who come through our doors. Savings from the 340B program help us provide diagnosis, medications and surgery to uninsured and underinsured individuals who would certainly die without medical intervention.

Hospitals using the 340B program operate on exceedingly thin margins. In the case of more than a thousand rural hospitals, savings from the program are often the difference between serving the community and closing for good.

And yet the drug industry continues to try and gut the program. For a bit of perspective, that $100 million pharma ad campaign could buy 1,639,344 vials of cisplatin 50mg treatments for breast, ovarian, bladder and testicular cancer.

Imagine how many lives that could save.


Mary Margaret Kemeny, M.D., is director of the Queens Cancer Center of Queens Hospital in Jamaica, N.Y. She is also professor of surgery at the Icahn School of Medicine at Mount Sinai in New York City.

Robert Chapman, M.D., is director of the Josephine Ford Cancer Institute at the Henry Ford Health System in Detroit, Mich.

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