By Brian McNicoll

Hospitals are the “villains of the health care world,” we read in these pages last week. “The way hospitals are abusing the 340B program deserves to go in the hall of fame for shameless lobbyist shenanigans.”

Huh?

What’s going on here is major pharmaceutical companies made a deal with the federal government in 1992, and now they want out of it. As a condition of being able to sell into the massive Medicaid and Medicare Part B drug markets, they agreed to participate in the 340B drug discount program and thus provide medicines at discounts of 20 percent to 50 percent to public and non-profit hospitals and other healthcare providers that serve a lot of lots of low-income patients. 340B hospitals These facilities take treat the poor. They take on everyone who walks in or otherwise arrives at the emergency room, regardless of ability to pay.

big pharma

Is Big Pharma really bowing to lobbyists, or just trying to shirk the Obamacare discount program?

With the Obama administration increasing the number of people on Medicaid from 16 million to nearly 50 million, the cost of missing out on that market is simply too high. So the drug companies are trying to erode or outright destroy the 340B program in Washington, and the statement above is a case in point.

Hospitals “siphon away the margin for billions in ill-gotten gains,” the story read. Yes, it’s a real bimonthly bacchanalia in the Bahamas for hospitals from coast to coast, financed, according to Big Pharma, by $4.5 billion in what should be drug industry profits.  

Only that’s not what happens. Most Many of the discounted drugsmedicines are sold provided for at a discount or for nothing at all to patients who can’t pay. Any margins realized from sale of these medicines drugs to insured patients (exactly how the program was designed) go to improving low-income patient care in other ways.

This is not a perversion of the program; it is precisely what it is designed to do – free up resources so hospitals can better serve low-income patients without further drain on the public purse. The That’s because 340B program is is funded almost entirely by the drug industry, not taxpayers. But it decidedly works to the public good.

A recent survey of hospitals that participate in the 340B program shows 340Bit enhances  their ability to serve the uninsured or underinsured. It also increases their ability to provide free and discounted drugs to needy patients, counseling, follow-up for low-income patients, medical therapy management programs and hospital readmission-reduction programs. It also funds health clinics.

This is not a perversion of the program; it is precisely what it is designed to do – free up resources so hospitals can better serve low-income patients without further drain on the public purse. That’s because 340B is funded almost entirely by the drug industry, not taxpayers.

The program is neither dysfunctional nor the victim of fraud perpetrated by hospitals. The truth is 340B works well;  and pharmaceutical companies just hate bankrolling it. They’d rather push drug prices to outrageous heights.

340B hospitals treat the poor. They take on everyone who walks or otherwise arrives at the emergency room, regardless of ability to pay. Meanwhile, Big PharmaThe industry has boosted prices 100 percent since 2011 on four of the 10 best-selling drugs. The other six all have gone up at least 50 percent.

The drug industry can’t tear up the deal it made with the government. It has to have access to the Medicaid market, particularly with the alarming expansion that has been part of Obamacare.

One strategy is to make 340B program rules so onerous, so difficult, so ridiculously cumbersome and expensive to implement that hospitals drop out of their own volition. Another is to try and rewrite the 340B law and to severely restrict hospital eligibility. And who would then have to pick up the tab to help treat the poor? Local taxpayers, in many cases. Often, local taxpayers.

Big Pharma makes a huge contribution to our economy, not to mention our way of life. American pharmaceutical customers essentially finance drug and treatment research for the remainder of the world. We get first access to these drugs, but we pay more for prescriptions as a result.

But whenWhen it comes to the 340B program – which brings treatment and many prescription drugs to low-income Americans at little or no cost to them, minimal cost to taxpayers and a reasonable cost rate even to the pharmaceutical companies involved – the victim is not Big Pharma and the villain most certainly is not the hospitals.