Peter Pitts: Underserved Utah patients require increased transparency

Too often, hospitals keep savings on drugs that are supposed to be passed along to patients.

(Julio Cortez | AP file) In this July 10, 2018, photo bottles of medicine ride on a belt at a mail-in pharmacy warehouse in Florence, N.J.

Utah families are struggling to manage both the high costs of everyday goods and the COVID-19 pandemic’s continued financial and health impacts. Despite this, mounting evidence shows that some hospitals, pharmacy benefit managers and pharmacies are putting patients’ finances and health outcomes on the line as they take advantage of federal drug pricing programs to pad their own corporate profits.

Hospitals must prioritize patient care for the Beehive State’s most vulnerable communities, starting by instituting increased transparency in these federal safety net programs, including the 340B Drug Pricing Program.

COVID-19 exposed gaps in Utah’s health care system, including a lack of hospital care for many vulnerable communities. Residents of rural areas in the state faced unique challenges during the pandemic due to barriers to primary care services. Currently, 15% of the Utah population lives in a medically underserved area, with the pandemic only exacerbating existing obstacles to essential healthcare. In several Utah counties, the National Guard was even called in to provide the additional personnel required for hospitals to maintain service.

Many of these same Utah communities rely on the 340B Drug Pricing Program to access affordable care. Congress created the 340B program in 1992 to protect vulnerable rural communities and expand the reach of hospitals in communities without access to primary care. 340B enables eligible hospitals to access significant discounts for treatments administered or prescribed through an outpatient facility.

Over the years however, poor oversight and a lack of transparency in the program have allowed hospitals and pharmacy benefit managers to pocket the savings they receive instead of passing them on to vulnerable patient populations who desperately need them. In fact, hospitals can obtain medicine at steep discounts from a drug manufacturer and then bill patients — including the uninsured — for the full price of a treatment with no consequence. There are no rules regarding what hospitals can do with their savings, nor are they even required to disclose how they spend their funds.

340B abuses are not the only instance of Utah hospitals prioritizing profits over patients. In 2019, Utah-based hospital chain Intermountain Health settled a whistleblower case which alleged that Intermountain Medical Center and St. Mark’s Hospital in Salt Lake City performed unnecessary heart surgeries on Medicare patients, overcharging the federal government to the detriment of patients.

With more than 2,500 340B hospitals in the U.S. and 340B sales of medicines rising 127% since 2017, it is essential that the program is operating with appropriate oversight to prohibit bad actors from exposing program loopholes to grow their profits. Access to treatments and primary care is critical but must not come at the cost of exploiting Utah patients living in medically underserved communities.

Hospitals across the country have taken advantage of 340B to increase their revenues, while failing to provide commensurate charity care for the communities they were intended to serve. A report from the Center for Medicine in the Public Interest shows that 72% of private nonprofit hospitals in the 340B program had a fair share deficit, spending less on charity care and community investment than they received in tax breaks. Combined, the fair share deficit of these hospitals was $17 billion.

At a moment of great economic stress for Utahn families, bad actors in the healthcare system are keeping patients from the intended benefits of federal safety net programs, including 340B, while keeping profits for themselves. Utah hospitals, PBMs, and pharmacies must be held accountable for their use of these programs to ensure that the state’s most vulnerable communities are receiving the care they are entitled to.

Peter Pitts

Peter Pitts is a former associate commissioner of the U.S. Food and Drug Administration and president and co-founder of the Center for Medicine in the Public Interest.