Guest Commentary: 340-B Drug Program Hurts Small Businesses

-by Hiliary Solet

As a conservative who believes in limited government, I am always
suspicious when I learn that the government is using its power to
advantage certain industries even when they claim to do so in the name
of helping the poor.  As a native American, whose community is
disproportionately disadvantaged, I am especially concerned when I
learn that those industries so benefited are not passing along the
benefit to the poor.  It is crony capitalism at its worst.

Not many Americans are aware of a little know government program
called 340Bwhich was created in the 1990s to help not-for-profit
clinics and hospitals to provide life-saving prescription drugs to
uninsured and underinsured patients.  The program requires those who
manufacture drugs to sell them at a steep discount (up to 40%) to
qualified entities.  The clear intent of the law was that this
discount be passed on to the poor to help them afford their
prescriptions.

But increasingly, large public hospitals and some chain drugstore who
are their partners, have hijacked the program.  They now claim the
discount drug price for all their patients – including those who are
fully insured and not even poor.  The hospitals buy the drugs at a
deep discount and resell them at full price to their patients making a
significant profit.  These sales often occur through chain drugstore
with whom the hospitals have special arrangements.  Most patients
don’t even know this is happening and very few patients see any
benefit from this discount.  The hospitals simply keep the money.

This government program generates hundreds of millions of dollars --
so much revenue that even some hedge funds have invested in businesses
that show hospitals how to legally game the 340B program.

The 340B Program is properly used by some not-for-profit clinics to
genuinely help poor people.  It can be important to many people in my
native American community.  But lack of Congressional oversight has
led to abuse of the program and the program needs to be reformed and
returned to its original purpose.

As a physician, our US Senator Bill Cassidy, understands both the
importance of this program to the poor but also sadly the way in which
it is increasingly abused.  During his years in the House of
Representatives, Senator Cassidy was a leader in seeking more
oversight and reform of the program.  Now as a member of the Senate
Health, Education and Labor Committee we need to encourage him to
continue his reform efforts.  We need to contact Senator Cassidy and
encourage him to keep up this effort to bring about reform.
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