Charity care program fails

More than two decades after Congress formally established the 340B program to ensure that vulnerable and uninsured patients would have access to prescription medicines, it is increasingly clear that needy patients are not always the ones reaping the benefits of this important program. 

The law’s intent was that federally funded safety net community clinics and some public and non-profit hospitals serving high numbers of needy and at-risk patients would be eligible for the program. However, a new report compiled from publicly available data analyzed by Avalere Health shows that the majority of disproportionate share hospitals (DSH) that participate in the 340B program provide proportionately less charity care than the average U.S. hospital does. DSH hospitals, unlike the federally funded community-based clinics that operate on an “ability to pay” basis, have wide latitude in how much charity care they provide.

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In fact, charity care represents 1 percent or less of the total cost of providing patient care for approximately one-quarter of 340B DSH hospitals.  These findings suggest that the program has strayed from its original intent as hospital participation has greatly expanded over time.  Today, in fact, a third of all U.S. hospitals participate in the 340B program.

The Alliance for Integrity and Reform (AIR340B) -- a coalition of patient and provider organizations as well as representatives from the biopharmaceutical industry -- strongly believes that the program has strayed too far from its intent. There remains a need for the 340B program to serve as a valuable safety net for those needy and vulnerable patients who lack access to care. For many patients, qualifying for charity care may be the only way to get necessary treatment for free or at a reduced cost and avoid crushing, insurmountable medical debt.  However, this paper highlights the fact that about one-fifth (22 percent) of all 340B DSH hospitals are providing 80 percent of the total charity care provided by 340B hospitals.  This raises serious questions about whether the current 340B eligibility criteria for DSH hospitals are appropriately targeted to those entities that serve as true safety net hospitals.

With this in mind, Congress must ensure that the economic benefits of the 340B program are used for our country’s neediest patients and that DSH hospitals are accountable to the program’s original aims.

To promote a well-functioning 340B program underpinned by sound policy and designed to support access for needy patients, Congress should reconsider the eligibility criteria for DSH hospitals. We need to ensure the program is serving its intended purpose of helping vulnerable patients access the medicines they need.

Silverman is spokesperson for the Alliance for Integrity and Reform of 340B.