Industry Voices—Why drug companies should stop meddling in the 340B program

Even with drug prices skyrocketing and new drugs coming to market at astronomical starting prices, a group of drug companies continues to seek ways to boost profits even higher.

By targeting drug discounts required by the 340B drug pricing program, companies are hurting safety net hospitals, health centers and public health clinics serving the Americans most in need.

In his recent opinion piece, drug industry consultant Jeremy Docken demonstrates how companies are broadening their attacks on 340B. He argues the program has grown too large and needs industry intervention to rein it in, but he omits several important facts.

340B is not your typical government program.

RELATED: Industry Voices—The 340B drug program grew faster than the infrastructure that supports it. Here's how to tackle that challenge

Instead of using taxpayer funding, 340B requires drug companies to discount some of their prices to support more care for low-income and rural Americans. Health providers use the savings from those discounts to provide more care and support to people with low incomes and rural patients. For nearly 20 years, 340B hospitals have partnered with community pharmacies to dispense eligible drugs to hospital patients, stretching resources that enable hospitals to serve even more patients in need through free and discounted drugs and expanded health services.

In 2010, Congress expanded the types of hospitals eligible for 340B discounts to include more than 1,000 rural facilities that often are the only hospitals for many miles. The health system also has experienced a shift of care from inpatient hospital stays and surgeries to outpatient visits and drug therapies, improving patient health outcomes and saving the overall system billions of dollars. 340B discounts only apply to certain outpatient drugs.

Of course, we cannot ignore drug prices. In the past decade, drug companies have hiked the prices they charge for existing products by huge amounts, even when there is little or no evidence of greater effectiveness. Take insulin, a drug critical to the lives and health of 34 million people living with diabetes. Eli Lilly introduced its top-selling insulin product in 1996 at a cost of $21 a month, but by 2019 it was charging $275, a 1,200% increase. Sanofi and Novo Nordisk, the other suppliers of insulin in the U.S., have followed suit. And when new drugs come out these days, many companies price them so high that they make front-page headlines.

It’s not coincidental that all three manufacturers of insulin in the U.S. are among the six that are maximizing profits by denying discounts to safety net hospitals on drugs dispensed at community pharmacies. Department of Health and Human Services (HHS) Secretary Xavier Becerra has ordered these companies to restore discounted pricing and repay overcharges from the past year, but they are fighting this enforcement order in federal courts.

Docken’s remark that this fight is “causing strife” vastly understates the level of harm the drug company behavior is doing to safety net patients who are losing access to the care and support they need. And Docken fails to mention that his company, Kalderos, is working with its drug company clients in ways that would worsen that strife.

Kalderos aims to help drug companies unilaterally and radically change 340B from a system of upfront discounts to one of post-sale rebates, giving manufacturers unprecedented control over when—and even if—they will pay mandated discounts. A bipartisan group of 224 members of the U.S. House of Representatives signed a letter (PDF) to the HHS calling on the department to block this unlawful move.

It’s time for these machinations to stop so that safety net hospitals, health centers and clinics can get back to providing critical, affordable care to patients in need. 

Maureen Testoni is the president and CEO of 340B Health, which represents more than 1,400 hospitals that participate in the 340B drug pricing program.