facebook-pixel

Holly Richardson: A good program to help sick people has gone wild

The biggest losers in all this, of course, are the truly needy who can benefit from a program like 340B.

FILE - In this Monday, Nov. 23, 2015, file photo, a woman passes Pfizer's world headquarters, in New York. British regulators fined U.S. drugmaker Pfizer and distributor Flynn Pharma a record 89.4 million pounds ($112.7 million) Wednesday, Dec. 7, 2016 for increasing the cost of an epilepsy drug by as much as 2,600 percent. (AP Photo/Mark Lennihan, File)

At any one time in Washington, D.C. there are thousands of individual battles going on over hundreds of issues, large and small. If the issue or bill is not headline-grabbing, like tax reform or Trump’s latest tweet, it may not get much attention, even if the end result ends up hurting the very people it is supposed to help.

Recently, the 340B program has come under heightened scrutiny and is now the subject of a lawsuit. 340B is a government-mandated program that began back in the early days of the AIDS epidemic. Emerging new drugs and the “cocktails” used to fight HIV were prohibitively expensive. Many patients were uninsured. So manufacturers who wanted to continue receiving Medicaid reimbursement began a program of selling those drugs to treat low-income and uninsured patients at deep, deep discounts to the hospitals that treated those patients.

In the ensuing years, the program has expanded. Lack of specificity in the regulations surrounding 340B allowed hospitals to find and exploit a loophole. In 2015, Forbes contributor Christopher Versace wrote that “Talyst, a consultant to hospitals and contract pharmacies began lobbying for a rapid expansion of the program recognizing, in the words of Talyst, ‘There is no requirement to pass the savings on to patients directly.’ Companies soon discovered it was legal, under certain parameters, to take in drugs at a discounted rate and charge insurers for the full cost of the drugs without passing the discounts on to patients.”

An analysis published in 2014 by Avalere Health showed that charity care — the purpose of the 340B program — made up 1 percent or less of total costs for a quarter of the hospitals participating in the program. Approximately two-third of participating hospitals provide less charity care than the average hospital in this country. About 40 percent of all U.S. hospitals buy drugs through this program, according to an 2015 report from the Government Accountability Office.

Rural hospitals often rely heavily on 340B payments to keep their doors open, although clearly the program was not intended to backfill budgetary shortfall. Because the program includes hospitals plus clinics and outpatient facilities owned by hospitals, it has incentitivized hospitals to gobble up small physician-owned practices and put them under the hospital umbrella. This results in fewer choices and higher costs for the patients, somehow forgotten in this particular battle.

It’s not just rural hospitals, however. The Charlotte Observer reported that Duke University Hospital cleared a tidy $69.7 million profit from selling 340B drugs to its patients, 67 percent of whom were covered by commercial insurance with only 5 percent totally uninsured.

Earlier this month, as a result of increased scrutiny of the program and a lobbying campaign by PhRMA, The Centers for Medicare and Medicaid Services announced a rule that will cut Medicare payments to hospitals enrolled in the 340B program by 28 percent, or approximately $1.6 billion, intended to “decrease waste, fraud and abuse” in the program’s implementation.

In response, the American Hospital Association, the Association of American Medical Colleges and America’s Essential Hospitals filed a lawsuit against the U.S. Department of Health and Human Services to prevent the cuts from taking place, while an aggressive lobbying campaign is underway to keep the program as it is, with little oversight or accountability and lots of “flexibility” in where the money goes.

The biggest losers in all this, of course, are the truly needy who can benefit from a program like 340B. Cancer patients, children with significant medical needs, the indigent, veterans on Medicaid — those are the ones this safety net was meant to help. While big Pharma and the hospital-industrial complex spend millions fighting over who gets the money, the patients in need get to wonder if they will be able to receive treatment at a price they can afford.

Holly Richardson

Holly Richardson is trained as a Registered Nurse and a midwife. In the Utah House, she requested and was granted a spot on the Health and Human Services Sub-Appropriations committee where she heard countless stories of where the safety net was and was not working in Utah.