Established under the Public Health Service Act in 1992, the 340B drug pricing program has a critical goal: improve access to medicines for low-income patients at qualifying hospitals and clinics. Through the program, biopharmaceutical manufacturers provide tens of billions of dollars in discounts on outpatient medicines with the expectation that the qualifying hospitals and clinics would use the savings to ensure vulnerable patients have access to needed medicines.
But since its founding, the 340B program has become less about patients and more about increasing profits for large hospitals, pharmacies and pharmacy benefit managers (PBMs).
Elizabeth Carpenter, Executive Vice President of Policy and Research at the Pharmaceutical Research and Manufacturers of America (PhRMA), shares the reason for this egregious abuse of the 340B program: a lack of guardrails to ensure that participating hospitals actually use the massive discounts generated through the program to directly help patients.
“A recent study found that something like 85% of entities getting 340B dollars are spending less money on charity care than they're making from the program. So, it feels like those dollars are not being used in the right way and aren't really consistent with the intent of the program,” Carpenter explains.
Tune in to the full episode to hear how policymakers can reform the program to work for the patients it was created for, not the bottom lines of large hospitals and for-profit corporations.
Rebecca Willumson:
Hi there. I'm Rebecca Willumson. I'm the publisher of Fierce Pharma, and I'm here today with Elizabeth Carpenter, Executive Vice President of Policy and Research at PhRMA. Elizabeth, thank you so much for joining me.
Elizabeth Carpenter:
Thanks for having me.
Rebecca Willumson:
So Elizabeth, we're hearing more about the 340B program, both in recent court cases and congressional investigations. Can you explain the program and what it's designed to do?
Elizabeth Carpenter:
Sure. So the 340B program really is a drug discount program that was well-intentioned in the beginning, really designed to help patients. I think the reality is that the program is off track, right? And today it is the second-largest drug pricing program after Medicare Part D. So huge, right? Manufacturers are giving tens of billions of dollars to discounts to entities purchasing their medicines. In some cases, for as little as a penny. And what we've really seen is the program has become a profit center for hospitals. Not just hospitals though, but also PBMs, pharmacies, vertically integrated entities. And it's really time for reform, which is I think why you're hearing more about the program.
Rebecca Willumson:
Sure. So tell me, in what ways has the 340B program strayed from its original purpose?
Elizabeth Carpenter:
I think I talked about the fact that it was really designed to help patients, and unfortunately we're just not seeing a lot of evidence of that. So for example, research is showing that in some cases, hospitals are collecting seven times more from insured patients for medicines then they might experience in a typical independent physician office. So that's a really big difference. And then also these entities are not really using the money that they're making from the discounts to help patients in other ways. So a recent study found that something like 85% of entities getting 340B dollars are spending less money on charity care than they're making from the program. So it feels like those dollars are not being used in the right way and aren't really consistent with the intent of the program.
Rebecca Willumson:
So let's talk about how is it exacerbating health equity disparities?
Elizabeth Carpenter:
Yeah, so when we think about it, two-thirds of 340B hospitals are actually not in medically underserved areas. So let's just start with that. The vast majority are sort of outside of where we think people need the most help. And then as we talked about, these entities really largely are not using those dollars to lower patient costs. There have been a number of studies recently that have actually talked about the fact that because employers and others are paying more for drugs maybe than they should, that premiums are actually going up. And then I think there's a lot more attention on the fact that these entities are getting 340B dollars and a lot of cases are also engaging in very aggressive debt collection practices. So you kind of get to the point where you're like, okay, not only is the program not helping the people, it was intended... In some cases, it's actually making the financial burden worse.
Rebecca Willumson:
So in your opinion, what should we do to reform the program so it works as intended?
Elizabeth Carpenter:
Yeah. I mean, I think really a few things. One, you start with the patient and these dollars really should be going to the right patients. And to the degree manufacturers are providing discounts, a patient should be sharing in those savings, right? What they pay to their hospital should be lower than it would otherwise be, which sort of leads you to the hospitals or the entities, right? The right entities should be benefiting from the program. True safety net facilities, facilities that are helping large numbers of low income, vulnerable patients. And there should be standards for those entities, right?
Those entities should be using these discount dollars to help patients to provide other types of services. They should be spending that money on charity care, for example. And then finally, really, it's time to sort of modernize the data portion of this program, right? All of our world is very data-based right now. Unfortunately, there are some holes in what we see in the 340B program today. So I think we really want to modernize the data collection to ensure we can hold entities accountable. We're really excited to see the 340B Access Act introduced a couple of weeks ago in Congress, that bill addresses all of these concerns. And so really interested to see how the congressional debate unfolds.
Rebecca Willumson:
So to close this out, in addition to 340B reform, what else do you think we should be doing to address patient affordability in the health system?
Elizabeth Carpenter:
We talked a little bit throughout the course of our conversation about 340B, about how 340B entities should be sharing discounts provided by manufacturers with patients. I think another really great example of where that's not happening today is with PBM. So one of the ways we can really make access and affordability a reality for patients is ensuring that PBMs are sharing the discounts and rebates they get from manufacturers with patients at the pharmacy counter. I would also say that we really need to be thoughtful about protecting our innovation ecosystem. And whether it's the Inflation Reduction Act or proposals like march-in, I think the policy environment is not preserving and enhancing the ecosystem that we know allows for breakthroughs, that drives competition from biosimilars and generics over time and then allows reinvestment in patients. So I think if we focus on sharing more of those rebates and discounts with patients and protecting the ecosystem that has gotten us to the place we are today, we'll be in a much better place.
Rebecca Willumson:
That feels like a perfect place to stop. Thank you so much for joining me today. I appreciate it.
Elizabeth Carpenter:
Thank you for having me.