Preserve the 340B program and protect vulnerable patients

The exorbitant cost of prescription drugs threatens access and affordability for millions of Americans who need life-saving medications.  

That is why the 340B Drug Pricing Program, which provides discounts on drugs to some health care providers who serve large numbers of low-income and uninsured patients, is so critical. The program constitutes less than 2 percent of the pharmaceutical industry’s $374 billion in U.S. sales, but the pharmaceutical industry wants to scale it back or eliminate it.   

{mosads}That is the wrong prescription for advancing the health of underserved communities, and vulnerable patients would be the ones who suffer.  

Congress created the 340B program more than 20 years ago to give eligible health care providers financial relief from high prescription drug prices. Providers use the savings they receive on the discounted drugs to reinvest in programs that enhance patient services and access to care, and to provide free or reduced-priced prescription drugs to poorer residents. 

For example, Mercy Medical Center-Des Moines in Iowa has used 340B savings to provide critically important and expensive medications to patients with multiple sclerosis, asthma and other conditions – even if the patients cannot afford the treatment themselves. It also has been able to support chemotherapy treatments for cancer patients and fund a new program that allows the hospital to transport children from other hospitals into its specialized pediatric intensive care unit.  

Hospitals across the country use 340B savings to provide local access to drugs and treatments for cancer patients, clinical pharmacy services, community outreach programs, free vaccinations, transportation to patients for follow-up appointments and many other services to their communities.  

Despite the 340B program’s proven track record of increasing patient access to vital medical services and decreasing government spending, some are calling for changes.  

In August, the Health Resources and Services Administration – the federal agency responsible for administering the 340B program – proposed new policies for the 340 program. We are concerned that, taken together, the changes would jeopardize eligible hospitals’ ability to care for vulnerable patients and communities.  

And we are deeply troubled that the pharmaceutical industry and its supporters continue to make unsubstantiated claims about the program to persuade Congress to scale it back significantly or eliminate it altogether.  

The 340B program is more important now than ever before as a number of factors, including consolidation among pharmaceutical companies and lack of transparency in how much is spent on research and development, has led to steep increases in the price of prescription drugs.  

Earlier this year, the Centers for Medicare & Medicaid Services said prescription drug spending is projected to have accelerated from 2.5 percent in 2013 to 12.6 percent in 2014. In addition, an article this month in the Wall Street Journal said wholesale-price increases for 30 top-selling drugs sold by pharmacies averaged 76 percent from 2010 through 2014 – more than eight times the rate of general inflation. 

At the same time, hospital price growth is at historically low levels – less than 1 percent in 2015 and 1.3 percent last year.  

Meanwhile, according to data from Forbes, pharmaceutical companies averaged an 18 percent profit in 2013 – with the largest company posting a 42 percent profit. Compare that to 340B hospitals, which had an average operating margin of 3.9 percent in 2013. In fact, one out of three 340B hospitals had a negative margin. 

Scaling back the 340B program would force hospitals to curtail or even eliminate services that are essential to keeping patients and communities healthy in order to add to the record profits of pharmaceutical companies. Congress should preserve the 340B program and protect the safety net upon which our most vulnerable patients rely. 

Pollack is president and CEO of the American Hospital Association, which leads, represents and serves more than 5,000 member hospitals, health systems and other health care organizations.