What does it mean to be a patient? For some, it means access to the best doctors and hospitals. For others, it means a courageous battle against a chronic, and perhaps incurable disease. And for many, it means struggling with how to pay their bills.
Connecticut has been a leader in helping residents deal with medical debt. Late last year, Gov. Ned Lamont announced a program that utilized funds from the American Rescue Plan Act (ARPA) to eliminate $30 million in medical debt for 23,000 Connecticut residents.
While that pennies on the dollar approach was great news for those residents, at the time, state Sen. Saud Anwar (D-Windsor), co-chair of the public health committee,made an excellent point: Connecticut needs to do more to prevent high healthcare costs for residents in the first place.
Unfortunately, a program that already exists at the federal level, designed to lower drug costs and improve access to medication for low-income Americans, has been corrupted.
The 340B federal drug discount program was created in 1992 and is the second largest drug program in the country. It was designed to help reduce the financial burden of accessing medication for the uninsured and under-insured. However, the system has been misused; 340B has morphed into a way for large tax-exempt hospitals and for-profit chain pharmacies to markup medicine prices and boost their profits.
While some 340B participants, such as community health centers and other safety-net clinics, reinvest income from the 340B program back into patient care as required by federal law, other program participants lack transparency into how, or if, savings are helping low-income patients.
In this program, manufacturers sell drugs to 340B hospitals at deeply discounted prices. The hospitals then contract with pharmacies to dispense those medicines. The intent was that the contracted pharmacies would be in low resource areas and pass along the discounts to their uninsured and under-insured consumer base. There is little evidence, however, that this program is operating in the manner it was designed.
In fact, a comprehensive analysis found that most patients received “zero or close to zero” discount on the price of their drugs even though those treatments were purchased at steep discounts through the 340B program. In 2022 alone, hospitals and big chain pharmacies pocketed more than $50 billion in discounts that were intended for patients.
Because of a lack of oversight and transparency within the 340B program, hospitals have gotten away contracting primarily with big chain pharmacies in wealthier, whiter neighborhoods and out of state, where customers have private insurance and pay full price.
In Connecticut,60 percent of 340B pharmacies that are supposed to be serving the low-income population are instead located in affluent neighborhoods. Furthermore, 139 pharmacies, roughly 30 percent of the total number of pharmacies, are located outside of Connecticut, with some as far away as Texas. This begs the question – how does that help our residents? To put it simply, it does not.
It is time to ensure that this gaming of the system stops and that those who the program was intended to help, are indeed being supported. As a federal program, legislation can only occur at the federal level to address these issues.
That is why Connecticut lawmakers should reject the 340B provisions in SB11—a wide ranging bill that will do nothing to help patient costs but could exacerbate the already bloated issues within 340B.
Our Congressional lawmakers need to lead this charge and increase regulations on 340B contracts.
Any fix must include stipulations as to how and where the discounted drugs can be sold and to whom. There needs to be more transparency and accountability down the distribution chain so that our most vulnerable populations are able to get the medications they need at the cost they can afford.
The 340B programhas the unique opportunity to advance health equity by supporting safety-net providers in underserved communities, but misguided eligibility standards and loopholes have 340B hospitals and their associated pharmacies to prioritize profits over patients. It’s time for that to change.
Haley Director, MPH is on the Board of Directors for Rare New England and works on policy initiatives.