Drug industry, hospitals fight over 340B drug pricing program

The drug industry and hospitals have been butting heads over the future of a federal drug pricing program for more than a year, according to The Washington Post. Federal regulators may finalize stricter guidelines for the program — possibly within the next few months — that could limit the amount of patients eligible to receive discounted drugs.

The program

The 340B drug pricing program, developed 24 years ago, ensures hospitals treating a large proportion of low-income patients can buy drugs from manufacturers at a discount of 20 percent to 50 percent, according to the report. Hospitals can provide the drugs to uninsured patients for free, or at a discount, while selling the medications for higher fees to insured patients.

About one-third of U.S. hospitals — or 2,000 — participate in the program, purchasing about $12 billion in discounted drugs in 2015. In 2009, hospitals purchased only 4.3 billion, according to the HHS' Health Resources and Services Administration, which manages the program.

The drug industry

In 2010, the Affordable Care Act extended the 340B dug pricing program, allowing rural hospitals to participate, the report states. The drug industry argues the expanded program has surpassed its original purpose of providing care to poor patients and now acts as a profit generator for hospitals. The industry believes hospitals buying the discounted drugs are not devoting enough resources to caring for low-income patients and calls for stricter oversight to make sure hospitals are not abusing the program.

"The program is growing much faster than anyone thought it would. The discounted prices that have to be extended to [hospitals] have become greater and greater to the point where senior executives at pharmaceutical companies are paying attention to that part of the bottom line, to see how much of it was taken out by 340B," said John Shakow, a lawyer representing the drug manufacturers.

The hospitals

Hospital advocates, including former congressman Henry Waxman (D-Calif.) who authored the program's original legislation in 1992, urge regulators to protect the program, saying the restrictions would negatively impact low-income patients and safety-net hospitals. They argue the drug industry is simply trying to save profits by scaling back the program, according to the report.

"Here we find ourselves in a time of enormously high prices," said Ted Slafsky, president of 340B Health — a group of hospitals lobbying to protect the drug program."[T]his is one of the few programs that exist to help moderate drug pricing."

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