Do hospitals profit from drug discounts meant for poor, uninsured patients?

After questioning three North Carolina nonprofit hospitals about how they manage discounted drugs, Sen. Chuck Grassley (R-Iowa) has drawn some damaging conclusions.

Information he acquired from Duke University Hospital, Carolinas Medical Center and UNC Hospitals suggests the hospitals are profiting from the discount drug program designed to aid poor and uninsured patients, the Charlotte Observer reported.

For example, Duke University Hospital purchased $65.8 million in drugs through the 340B program and saved $48.3 million. After selling the drugs to patients for $135.5 million, Duke was left with $69.7 million in profits, the Observer noted.

And with "virtually no oversight," Grassley said more hospitals are using the federal 340B drug discount program to treat patients with private insurance, pocketing the difference between what they pay for the drugs and what insurers are paying. He notes 67 percent of Duke patients who received discount drugs had commercial insurance, while only 5 percent were uninsured.

Amid accusations that nonprofit hospitals are taking advantage of the drug discount program, drugmakers are fighting back, partly through a new report that questions hospital eligibility and calls for more oversight, FiercePharma previously reported. Some drugmakers even say they're going to start performing their own audits of participating hospitals.

Hospitals maintain they reinvest the savings into providing other services for financially disadvantaged patients. Thanks, they say, to the drug discount savings, Carolinas HealthCare System increased access to cancer infusion centers, and Duke upgraded technology and expanded services.

Past research also suggests savings reaped from drug discounts go beyond pharmaceutical purchases and are vital to keeping safety-net hospitals afloat, FierceHealthFinance previously reported. A June 2011 survey found 100 percent of responding hospitals consider the 340B program important to their ongoing operations, while 85 percent say it is critical.

For more:
- read the Observer article

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