A recently released report by The Center for Medicine in the Public Interest (CMPI) exposes how some of the nation’s largest and most prestigious hospitals, pharmacy benefit managers (PBMs) and pharmacies abuse the Federal 340B Drug Pricing Program to enhance their own profits at the expense of uninsured and low-income patients. The 340B program—created in 1992 to enhance prescription-drug access for low-income and uninsured patients—allows hospitals and clinics to purchase medicines at highly discounted rates.
The report, “340B and the Warped Rhetoric of Healthcare Compassion,” along with a recent New York Times cover story reveal that hospitals are not only pocketing 340B revenue without providing commensurate charity care, but they are also obtaining 340B medications at dramatically discounted rates for insured patients for whom they can charge the full price and pocket the difference. According to the new report, 72% of private nonprofit hospitals had a “fair share deficit,” meaning they spent less on charity care and community investment than they received in tax breaks. The combined fair share deficit for private nonprofit hospitals was $17 billion, with individual hospital deficits ranging from a few thousand dollars to $261 million.
The report also cites the growth in hospitals’ use of contract pharmacies, which largely dispense drugs to patients who have prescription drug insurance—not to uninsured or financially needy patients. Between 2013 and 2020 alone, hospitals established more than 94,600 new contract pharmacy arrangements through the 340B program. In 2021, total sales of 340B-discounted drugs were estimated to be $44 billion, a nearly 16% increase from 2020.
Peter Pitts, president and co-founder of the Center for Medicine in the Public Interest, joined Cincy Lifestyle to discuss this issue, what’s in the report and what it all means for patients.
For more information, visit CMPI.org
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