How healthcare finance distorted pharma distribution

Prescription drugs are making me nauseous.

That makes perfect sense were I taking them. But I'm not. My response stems from how healthcare finance has morphed potentially life-saving medicines into commodities little different from pork bellies or orange juice.

This is apparently going on both among providers and the drug manufacturers.

The first instance is abuse occurring in the 340B program, which allows hospitals to purchase drugs at deep discounts to treat low-income or uninsured patients.

It turns out that at least one major teaching hospital, Duke University Hospital, has admitted to selling the drugs it purchased at a discount and reselling them to insured patients at a markup. This practice cleared a profit of nearly $70 million last year alone. Meanwhile, Duke defends the practice, saying it used the drug discount savings to upgrade technology and expand services.

Given the hundreds of hospitals that participate in 340B, I would be shocked, shocked if Duke were alone in this practice. And given the huge amount of costs being shifted to patients with high-deductible health plans, I also wouldn't be shocked if hundreds, if not thousands, of them were being financially squeezed as a result.

Then there's an ongoing, apparently chronic drug shortage that seems to be comprised primarily of old-line yet low-margin generic drugs. These include shortages of etomidate, a short-acting general anesthetic that has been manufactured for more than 40 years, epinephrine, which is used to restart arrested hearts and counterbalance allergic reactions, and ammonium chloride, which is used as an expectorant and for treating some urinary tract infections.

Altogether, the U.S. Food and Drug Administration reports more than 200 current drug shortages. Many seem to focus around the same three or four manufacturers, which cite unspecific manufacturing delays.

This shortage also has spread to many cancer drugs, which is forcing providers to cut corners on care and may be affecting patient outcomes.

I first mentioned this issue nearly two years ago, and expressed skepticism that general manufacturing delays seemed to have become endemic, particularly since many of the manufacturers reporting shortages also were posting record profits. Moreover, they appear to have not eased at all since then.

In response, the Center for Medicine in the Public Interest--which sounds like a consumer organization but is actually a mashup of a conservative think-tank and pharmaceutical industry mouthpiece--viciously attacked me rather than respond to the concerns I had raised.

My time, like those of many other journalists, is always short, particularly given the routine deadlines we face every day. I'd take a closer look at the pharmaceutical companies reporting shortages, but without posing as an employee on the assembly line or hacking into company emails, I'm not likely to discover anything new.

But I am going to take a closer look at the hospitals participating in the 340B program, which is public information. I will get back to you with what I find. I am hoping it will ease rather than exacerbate my nausea. However, I'm not getting my hopes up. - Ron (@FierceHealth)

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