by Laura Boudreau
December 14, 2022
High drug costs are top of mind in America. Eight in 10 Americans see drug company profits as a major contributing factor.
No wonder: Last year, the U.S. healthcare system spent $776 billion on prescription drugs. The same year, Pfizer’s CEO received over $24 million in annual compensation—not to mention a golden parachute worth nearly $113 million. Meanwhile, millions of Americans have to choose between buying groceries or paying rent, or filling their prescriptions.
Drug companies would like nothing better than to change the subject from ever-increasing drug prices and corporate profits. That’s why they are now targeting the federal 340B Drug Pricing Program and the safety net providers that participate in it. Drug companies recently launched an aggressive attack campaign to vilify the 340B Program and those providers, attempting to destroy or radically scale back the program.
Americans cannot afford that. The curtain must be pulled back on drug companies’ true motive to increase their profits by disabling a program that, for decades, has successfully lowered drug costs and expanded access to healthcare.
The new Congress must protect the 340B Program, and that can only happen if Americans understand its indispensability to the entire U.S. healthcare system.
Here are five reasons why 340B is essential to the healthcare safety net:
First, the entities that participate in the 340B Program make up America’s healthcare safety net. When creating the 340B Program, Congress’s goal was to enable public and nonprofit health care providers that serve low-income, uninsured patients to purchase drugs at lower costs. These providers are called “covered entities,” and they include federally qualified health centers, children’s disproportionate share hospitals, HIV health centers, and other providers that care for underserved populations.
Second, the 340B Program costs taxpayers nothing. The federal government effectively grants certain nonprofit and public entities the right to purchase medicine from drug companies at a discount. Think of it like the government giving you (a safety net provider) a discount card, which a drug company must honor when you present the card to buy drugs for your patients.
Third, drug manufacturers want to renege on the deal they struck with the federal government. To be clear: Drug companies choose to participate in the 340B Program; no one forces them. They participate because, by agreeing to provide discounts to safety net providers, the federal government rewards drug companies with access to the lucrative Medicaid and Medicare markets. Drug companies struck that deal back in 1992, and they reaffirmed it in 2010 when the Affordable Care Act expanded Medicaid and added more categories of safety net providers to the list of covered entities. Today, drug companies are keen to stay in Medicaid and Medicare, but ignore the fact that giving discounts to safety net providers was always part of the deal.
Fourth, drug companies still make billions of dollars from the 340B Program. Last year, they made at least $44 billion in sales to 340B safety net providers. So let’s be real: Drug companies profit immensely from the program. They just want to earn more profit by charging safety net providers full drug prices—without discounts and without any accountability to ensure their profits are spent for the public good.
Fifth and most importantly, cutting back or eliminating the 340B Program would cost U.S. taxpayers more and make American patients sicker. The taxpayers’ burden would increase with safety net providers in their communities having fewer resources for services. For example, America’s strategy for ending the HIV epidemic depends on the resources that Ryan White medical providers generate from the 340B Program to provide a host of ancillary services needed to help people living with HIV stay healthy and keep their viral load at undetectable levels. This, in turn, prevents transmission of the virus.
In short, without 340B resources, HIV would become more prevalent in the United States, with more people needing more services—an even heavier burden borne by U.S. taxpayers. That cost is too high. The 340B Program is simply too important, and Congress needs to defend it.
Laura Boudreau serves as Chief of Operations at the AIDS Healthcare Foundation