340B Abuse is Skyrocketing

Even though it remains largely unknown to everyday Americans, 340B is on track to become the largest government-run drug discount program in the U.S. by 2028, eclipsing Medicare Part D. It is already larger than Medicare Part B, Department of Defense medicine spending, and Medicaid.

 

There are $54 billion in discounted drugs flowing through the program, but all those savings aren’t making their way to Americans who need financial help.

 

Small Businesses Are Paying the Price

Small businesses across the U.S. are in crisis, forced to choose between rising health care costs and laying off workers. Expanding 340B raises drug costs for patients and small businesses who pay for prescription drug coverage. A recent report showed 340B costs employers and their workers an estimated $5.2 billion in increased health care costs each year.

 

340B has grown to such an extent that it inadvertently contributes to market distortions impacting that not only burdens state budgets but also places an undue financial strain on individuals with commercial insurance and, ultimately, the taxpayers themselves. A new report found that $3.9 billion in 340B health system profits came directly from seniors and taxpayers in 2022. 

 

• The average profit margin on 340B medicines at contract pharmacies was 72 percent, generating an estimated $13 billion in gross profits in 2018.

• Employers and patients bear an estimated 27 percent of the profits 340B covered entities generated through the program via higher insurance premiums and higher prices for cash paying patients.

• North Carolina’s State Treasurer released a report finding 340B health systems overcharged state employees for cancer drugs and pocketed thousands of dollars in profit per claim. 

 

340B is Now Under Investigation

It’s no surprised that 340B has attracted the attention of government watchdogs, U.S. Congress, and numerous investigative organizations.

 

• U.S. Senator Cassidy (R-LA) recently expanded his ongoing investigation into how health care organizations are generating revenue from the 340B program.

• A Wall Street Journal investigation revealed the Cleveland Clinic used 340B to generate ~$136 million in revenue in one year but couldn’t account for any new drug discounts for patients.

• An investigative report into a major Virginia hospital system quoted a former hospital staff member saying the health system “was basically laundering money through this poor hospital to its wealthy outposts. It was all about profits.”

• The U.S. Government Accountability Office (GAO) reported nearly half of the 340B sites it reviewed didn’t give discounts to patients at the pharmacy.

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Despite all this, some state lawmakers want to EXPAND the 340B program when they should be launching their own investigations and protecting taxpayers.