The 340B Drug Price Program is under attack by the drug industry and its consultant vendor, Kalderos, as they attempt to brazenly convert the program from a drug discount that manufacturers must provide to nonprofit hospitals and clinics to a rebate program, setting Kalderos up as the arbiter of who will get the rebate and when
By law, drug manufacturers must provide a discount on drug pricing to covered entities (nonprofit hospitals and clinics) under 340B through an agreement with the government as a condition of Medicaid and Medicare covering their drugs
WASHINGTON (December 21, 2020) AIDS Healthcare Foundation (AHF) sounded the alarm today at reports that drug companies – through their vendor Kalderos – are moving forward with plans to undermine the 340B drug program – to the harm of safety net providers, who are already struggling to maintain services to their populations in the midst of a pandemic (340B Report 12/17/20). ‘The ‘Kalderos’ plan would convert the 340B Drug Price Program from a discount to a rebate program and would set Kalderos up as the arbiter of who will get the rebate and when, putting the fox in charge of the henhouse,” said Tom Myers, AHF chief of public affairs and general counsel.
The 340B program is not funded by taxpayers, but rather is a discount that by law drug manufacturers must provide to nonprofit hospitals and clinics through an agreement with the government as a condition of Medicaid and Medicare covering their drugs.
“Anyone who shops knows the difference between getting a discount at the time of purchase and a rebate at some unspecified date. At best, rebates mean long delays. At worst, they are illusory – denied when a manufacturer finds fault with your application or your receipt or determines that someone else has already claimed the rebate. Under the 340B statute, drug manufacturers are required to sell drugs to safety net providers at or below the discount price. It is not for drug manufacturers or their agents to determine when or who or on what conditions covered entities get that price,” added Myers.
Congress intentionally expanded the 340B program with the full knowledge and explicit approval of the drug industry. In 2010, when it enacted the Affordable Care Act, Congress increased the number and types of nonprofit hospitals that can participate. Drug companies actively lobbied for the ACA because they knew that, between Medicaid expansion and the ACA individual mandate, they would have a payer source for their drugs for tens of millions of new people. Since 2010, total drug company sales have increased over $85 billion per year.
“This proposal violates the congressional intent that created 340B. Kalderos is trying to ramrod its new rebate model, even while 246 members of Congress have expressed their alarm in a letter and even while HRSA itself has not approved this model. AHF urges the U.S. Health Resources and Services Administration which runs the 340B to assert its authority as enforcer of the 340B program and reject the Kalderos steal,” concluded Myers.
Please visit www.let340b.org for more information on the program and campaign to maintain the integrity of 340B.