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New Goldwater Report: Is the 340B Drug Program Failing the Vulnerable Patients It Was Supposed to Help?

February 23, 2023

Imagine a government program that allowed healthcare providers caring for the poor and uninsured to purchase drugs at discounts similar to those allotted to other government programs, including the Veterans Health Administration (VA) and Medicaid.

Now imagine that state Medicaid programs and the VA were selling these discounted drugs, which were supposed to provide treatments to their programs’ underserved patients, to other state and out-of-state pharmacies, and various affluent areas. Imagine that there was little or no accounting of where the revenues from these sales were going, who was benefiting, or, in some cases, if impoverished patients were getting these treatments but not any associated discounts.

Sadly, this is what is now transpiring across the country under the 340B Drug Discount Program, according to a just-released report from Goldwater Institute Vice President for Healthcare Policy Naomi Lopez and Healthcare Policy Analyst Amanda Hagerman, The 340B Program Is Now 30: How Well Is It Serving Arizona’s Most Vulnerable Patients Today?

Originally established by Congress in 1992, the 340B Drug Discount Program was created to help healthcare providers that serve low-income and uninsured patients to purchase drugs at a discounted price. Specifically, it requires manufacturers that participate in the Medicaid program to offer certain outpatient drugs to “covered entities”—i.e. hospitals and Federally Qualified Health Centers (FQHC), as well as a wide array of other providers, including those that care for rural and medically underserved populations—at discounted prices.

Now, for the first time, the Goldwater Institute’s new analysis sheds light on the relationships that hospitals and other healthcare entities have with pharmacies, often in other states. Using the federal government’s own data, the report shows just how rampant the very cozy, yet secretive, relationships between these entities and pharmacies across the country are.

At issue is whether significantly discounted drugs provided to hospitals and other entities serving the poor and uninsured are being sold at significant profits to pharmacies around the nation. In fact, the little-known 340B program has been expanded over its 30-year history with little to no additional oversight and accountability into whether the program is helping the patients it’s intended for, or simply padding these well-connected organizations’ bottom lines.

The project’s interactive maps show these arrangements in a variety of ways, including the 33 states where these drug treatments are being made available directly from 340B entities located in the state of Arizona, for example.

To view the interactive version of this figure, click above or click here.

“Arizona’s 340B healthcare entities have pharmacy contract relationships with pharmacies in 33 states across the country,” says Lopez, lead author of the new report. “Does selling these drug treatments, which were provided at a huge discount for the state’s most vulnerable populations, really end up helping Arizonans?”

Arizonans, as well as their federal and state representatives, should know about and publicly discuss if and how this program is serving the needs of the state’s most vulnerable populations. Any program that allows these drugs to be sold out from under the state’s most vulnerable patients requires patient protections, transparency requirements, and accountability and oversight reforms.

As the report explains, lawmakers who are serious about “doing something” about prescription drug access and prices should make 340B reform a top priority. Program transparency and integrity are the best places to start.

You can click here to read the full report, The 340B Program Is Now 30: How Well Is It Serving Arizona’s Most Vulnerable Patients Today?



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