Why the 340B Drug Pricing Program Is So Controversial

340B Drug

There is a significant, but quiet, debate going on among different players in the healthcare sector thanks to a 2022 ruling by the U.S. Supreme Court. It has to do with the federal 340B drug pricing program that gives certain healthcare providers access to deeply discounted drugs. The program is highly controversial on many levels.

Very few people know about either the program or its controversial nature because there are not affected by it. As explained by Ravin Consultants, a company that specializes in 340B implementation, compliance, and maintenance, the program itself was adopted in 1992 as a way to provide better access to healthcare among the poor and uninsured.

How the Program Works

The 340B program attempts to achieve its desired goals by managing prescription drug prices. Under the program, pharmaceutical companies are required by law to sell certain types of medications to 340B covered entities (CEs) at significantly discounted prices.

In turn, the CEs are expected to offer those drugs to customers at low or no cost. CEs are still reimbursed by Medicare at the normal rate, thereby actually putting money into their budgets. But that money is not supposed to go into an organization’s pockets. It is supposed to be invested in making healthcare services more accessible and affordable to underserved communities.

Unfair to Drugmakers

As for the controversy, it depends on which side of the equation you are on. Drugmakers despise the 340B program because they say it is unfair to them. They insist that being forced to sell certain drugs at discount prices is not right. Drug manufacturers say they ought to be able to decide prices for themselves.

They have a point. Price controls are never a good thing, and they tend to be implemented on an arbitrary basis. Very few things in modern society are subject to price controls. Subjecting the pharmaceutical industry to them, and only on certain drugs sold to certain entities, smacks of arbitrary mandates.

Higher Profits for Drug Companies and Pharmacies

Some people are opposed to the 340B program in its entirety. They say the drug companies and contracted pharmacies are making exceptionally good profits on the discounted drugs. They also have a point. Higher profits are possible through volume sales, which is exactly what you get when you encourage CEs to buy more drugs by giving the government money to do so.

A Program Lacking Transparency

At the real heart of the controversy is a lack of transparency. The 340B program is governed by an extensive list of rules federal bureaucrats expect everyone to play by. But no one really knows if the rules are being followed. There is so little transparency to the program that literally anything could be going on behind the scenes.

There are rumors that some CEs are not using the financial savings they reap from the program to provide better healthcare access to patients. Instead, the money is patting their profits. It has also been suggested that the use of contract pharmacies in recent years has led to hospitals otherwise ineligible to participate in 340B still getting access to deeply discounted drugs.

An Uncertain Future

The ongoing debate and a lack of transparency is clouding the 340B program’s future. Despite the 2022 SCOTUS ruling declaring the HHS decision to cut program funding illegal, there are no guarantees that 340B will survive. Congress seems willing to at least entertain the idea of ending it by taking away its funding. What will that mean for CEs and the patients the program is supposed to benefit? We will have to wait and see.

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