Another Ripoff? Feds’ Program to Provide Needy with Prescriptions Becomes Moneymaker for Hospitals

Howard Dean calls for reform

Remember Howard Dean? Former Vermont Governor is calling for reform of Federal program that was supposed to help the poor obtain prescription medication, but instead is lining the pockets of hospitals. (Photos courtesy Photos Public Domain.)

By William S. Bike

A program enacted in 1992 to give poor and underserved populations better access to costly prescription drugs has turned into a multibillion-dollar moneymaker for hospital mega-chains.

The 340B drug discount program allows hospitals, specified clinics, and other “safety net” providers to purchase outpatient prescription drugs at significant discounts. Theoretically, providers could pass along these savings to their underserved patients by charging them less for medications — or reinvesting in services and facilities for those in need.

“But nothing requires them to do that,” said Howard Dean, former Governor of Vermont and former chair of the Democratic National Committee who is a leader in the push to reform 340B. “So, very often, they don’t. Instead, they use the discounts to pad their profits.”

Though 340B participants get drugs at a discount, they can still seek reimbursement from commercial insurers, Medicare, and uninsured patients “at the much higher market rates,” Dean noted. “On average, for example, hospitals price top oncology drugs 4.9 times higher than their discounted acquisition cost.”

The number of entities eligible to receive 340B discounts has skyrocketed since the program’s…