GAO’s Latest Report on the 340B Drug Program

By July 12, 2018Commentary

The by-now infamous 340B drug purchase program, which was designed to lower drug prices for poor patients, is the subject of another report by the Government Accountability Office.   (GAO Report)   The program has become a battleground between hospitals, who are using it to derive immense profits in regard to patients not intended to be covered by the program, and pharma companies, who never want to see the prices for their products be lower.  You can tell something is wrong when the number of contracted pharmacies covered by the program goes from 1300 in 2010 to 20,000 now.  Many of the health systems and federally qualified health centers who participate contract with outside vendors to run their pharmacies and/or 340B participation, so it has become a big business.  GAO looked at 55 participating entities using contracted pharmacies.  Only 30 of these actually provided a discount on applicable drugs to low-income patients.  GAO specifically looked at the Department of Health and Human Services’ oversight and auditing of 340B contracting pharmacies and found serious weaknesses.  The use of contract pharmacies and the lack of good oversight only adds to the abuse occurring in the program.

While the GAO report is focused on the adequacy of HHS auditing of contract pharmacies, its description and findings about the use of 340B drugs is illuminating.  Discounts for drugs in the program range from 20% to 50%.  Those discounts are frequently not passed on in full to patients and payers.  That means the pharmacies and/or sponsoring entities are keeping the difference.  That is completely unconscionable.  I am all for having drug prices be as low as possible for everyone and that is a serious issue that needs to be addressed especially for branded drugs.  Programs like 340B can help poor patients have low or no drug costs.  But they never should be an opportunity for health systems to purchase drugs cheaply and charge payers and patients higher amounts, making significant profits by doing this.  Contract pharmacies are facilitating this process.  Congress and HHS have been deadlocked on making necessary changes to bring the program back to its original intent and avoid abuses.  It is way past time to take action.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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