If you have been reading Just Care, you likely already know that Medicare only covers about half of a typical person’s health care costs and, unless you also qualify for Medicaid, you might struggle to afford critical health care. Out-of-pocket health care costs present a huge barrier to care for millions of older adults and people with disabilities as well as millions of younger Americans with low incomes. Pew Trusts describes a worsening situation for low-income patients as drug manufacturers fail to participate as much in a federal drug discount program–the 340B program–and, in the process, make it harder for physicians and hospitals to treat low-income patients and for low-income patients to get needed medicines.
Doctors, clinics and hospitals are at risk of not being able to survive financially with the loss of drug manufacturers providing them with discounts on drugs under the federal 340B discount drug program. Some hospitals are losing millions of dollars a year. They cannot afford to pay staff or treat as many patients without insurance.
Lots of people are blaming the pharmaceutical companies, which certainly should be blamed for lacking the compassion to provide the drug discounts to people in need. But, they are businesses that are obligated to return as large profits as possible to their shareholders. And, they claim that some hospitals are profiteering off the drug discounts they receive from the 340B program.
But, pharmaceutical corporations continue to make out like bandits in the US. And, the real culprit here is Congress and state governments, which give these drug corporations the power to charge whatever they please.
Just two states, Arkansas and Michigan, have passed laws that require pharmaceutical companies to continue the 340B discounts for prescriptions patients fill at 340B pharmacies.
Since 2020, 17 pharmaceutical companies have ended or reduced their participation in the 340B program. Sometimes they ended contracts with hospitals. Sometimes they ended contracts with clinics. And, sometimes they ended all contracts.
They say that they object to the fact that some people with higher incomes, who should not be eligible for the discounts, benefit from the program. If it weren’t terrible that they are pulling back, it would be almost laughable that the reason is that they don’t have claims-level data on who is benefiting from the program. Pharmaceutical companies are notorious for keeping the vast majority of their data proprietary, not open to public scrutiny.
For their part, the safety net providers say it is administratively burdensome to collect this data, and it could be an infringement of patient privacy. At the same time, without the discounts, many health clinics report that a large portion of their patients will be forced to forgo insulin and other critical medicines.
The drug companies benefit if they participate in the 340B program because the federal government then covers their drugs in Medicaid. But, that is apparently not enough to keep them in.
The Health Resources and Services Administration, an arm of the US Department of Health and Human Services, oversees the program. Patients can get discounts at 340B pharmacies as high as 50 percent. The drug manufacturers point to a GAO report finding some violations by safety-net providers, as the reason they are pulling out of the program. But these violations represent only a tiny fraction of the total use.
The Biden administration says that the drugmakers that have pulled out are violating their government contracts. HHS has referred them to the Office of the Inspector General and plan to impose financial penalties on them. But, it has not suggested that it would take their drugs off of Medicaid formularies.
The pharmaceutical companies are suing to protect themselves from penalties. About half of all states’ attorneys general are siding with the federal government.
Here’s more from Just Care:
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