The federal 340B Discount Drug Program has been controversial since its implementation. The program is designed to help certain types of healthcare providers stretch their federal assistance further by giving them access to discounted drugs. According to the program’s most recent numbers, drug sales under 340B eclipsed $50 billion last year. Is that good or bad?
How you feel about 340B sales probably depends on your overall opinion of the program. Advocates celebrate the fact that $50+ billion in discount drugs have been provided to low-income consumers at little or no cost to them. Critics say that the program is yet one more example of a bloated federal government spending money it does not have.
The Basics of 340B
Under the 340B program, eligible healthcare providers can get discounts on a range of prescription medications purchased directly from pharmaceutical companies. They can sell the drugs to patients at retail or pass along their saving by selling at reduced prices. How does this help?
Healthcare providers eligible to participate in the program also receive federal funds to offset the cost of providing healthcare services to low-income patients. The thinking is that limited federal funds can do more good if the covered entities do not have to spend so much money obtaining prescription medications.
Covered entities rely on the help of 340B program consultants, like Florida-based Ravin Consultants, to make the most of the program. Consulting services are utilized for new program implementation, compliance purposes, and even program optimization.
The Big Winners in 340B
So who are the big winners in the 340B program? If you take actual patients out of the equation, it is the disproportionate share hospitals (DSH) who seem to benefit most from the program. According to the HRSA, DSHs accounted for more than $41 billion in prescription drug sales under 340B last year.
Health center programs took a distant second place at $2.7 billion. They were followed by children’s hospitals and rural referral centers at $1.6 billion and $1.3 billion, respectively.
Big Pharma Fighting Back
The big losers in the 340B program are big pharma companies. Understandably, they appear to be fighting back. In recent months there have been numerous complaints of pharmaceutical companies not providing the mandated discounts to covered entities who procure and sell the covered drugs by way of contract pharmacies. Big Pharma insists that contract pharmacies cannot be utilized under the 340B program.
It is only a matter of time before litigation settles that dispute. Nonetheless, the HRSA estimates that at least $470 million worth of 340B drugs were sold to covered entities last year above the established discount price due to the contract pharmacy dispute.
Money Is the Central Issue
Whether you think the 340B program is good or bad, money is the central issue. It always has been and always will be. And whenever you are talking billions of dollars, there is bound to be plenty of disagreement.
The program was originally conceived in order to save both patients and covered entities money. But saving one group money means costing another group. Covered entities may get their drugs at discounted prices, but that means pharmaceutical companies earn lower profits. That is just one issue.
The other issue is that the federal government is spending unimaginable amounts of money underwriting healthcare. Their spending is a contributing factor in the ever-rising costs of healthcare services in this country. Would things be different if 340B did not exist? Absolutely. But like the program itself, whether that would be good or bad depends on your perspective. That’s the way it goes with healthcare.
