Reform 340B drug discount program for the sake of low-income Georgia patients

The nonpartisan Congressional Budget Office released a bombshell new report in September about an originally well-intentioned health care program that has gone off the rails — one enriching middlemen in the drug supply chain while saddling patients, employers and taxpayers with billions in additional costs.

More than three decades ago, Congress created the 340B Drug Pricing Program to help safety-net hospitals better care for low-income and uninsured patients. Unfortunately, it has morphed into a system that too often enriches middlemen at the expense of vulnerable Georgians.

340B requires drug manufacturers to provide discounts to hospitals and clinics that treat underserved populations, with the idea that those providers pass along their savings to patients. But the program has grown far beyond its intent, with little oversight and virtually no transparency. Today, 340B is a profit engine for big health systems and middlemen, while community clinics, rural hospitals, and patients in need are left behind.

The stakes are particularly high in Georgia. Roughly two-thirds of our counties are shortage areas for dental care, mental health and primary care: 141 of 159 Georgia counties have underserved areas or populations, according to the Georgia Budget & Policy Institute.

Sixty-five counties have no pediatrician; nine have no doctor at all. Our rural hospitals face enormous strain — nine have closed since 2010. These are the very communities Congress had in mind when it created 340B, yet they see few of the benefits.

Instead, large health systems have figured out how to turn 340B into a lucrative revenue stream, per a Wall Street Journal report. They buy medicines at steeply discounted prices — sometimes more than 50% — but bill insurers and patients the full price, pocketing the spread. They accomplish this in part by choosing to contract with pharmacies in wealthy neighborhoods where they can sell drugs at steep markups.

Rather than using their savings to lower costs for patients, many hospitals reinvest their profits into acquiring independent clinics.

In fields like oncology and hematology, hospital systems flush with 340B dollars are buying up community clinics that deliver care close to home. For Georgians battling cancer, chemotherapy can cost 60% more once a hospital acquires a community infusion center. Patients are left with fewer choices, higher bills and longer drives to get the treatments they need.

Employers and taxpayers feel the strain as well. The growth of 340B has increased insurance costs for Georgia’s private-sector employers by almost $187 million, and another $27 million for state and local government health plans.

Perhaps most concerning is that we don’t even know where the money goes. Hospitals are not required to disclose how they use their 340B savings, so there’s no guarantee that the discounts reach low-income or uninsured patients. For a program that has ballooned to tens of billions of dollars annually, per the Health Resources and Services Adminstration, that lack of accountability is unacceptable.