Hospital abuse of drug discount program leaves seniors in the lurch
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To say the American healthcare system is complex is certainly an understatement. When even one healthcare program is not working, it affects us all. Seniors and lawmakers understand the importance of Medicare and work tirelessly to defend it, but we must also work to ensure that waste, fraud, and abuse have no place in the broader healthcare market. The 340B program is a prime example of a program that is being abused to the detriment of America’s seniors. And while the intentions of the program are good, the need for substantial reform is clear.

The 340B drug discount program was designed to help hospitals provide low income patients with the medicines they require. But hospitals have found loopholes that allow them to expand the program in ways that were never intended. In fact, studies show spending for the 340B program more than doubled in size between 2010 and 2015 and expanded by 66 percent between 2013 and 2015 alone.  

It is important to note that the number of low income patients eligible or served did not double during this time. These ballooning costs were driven by hospitals abusing the program for profit without patients’ best interests at heart.

Under 340B, hospitals receive large, mandatory discounts on drugs so they can pass the savings on to patients in need. Since its inception, however, hospitals have learned to game the system, pocketing the rebates as profits instead of utilizing the discounts for patient care. This practice has been good for the health of hospitals’ bottom lines but not the health of the patients they serve.

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Furthering the problem, abuse of the 340B program has likely accelerated the rate of local clinic closures. Independent physicians and smaller practices simply cannot compete with the larger hospitals receiving government funded discounts. Consolidation in the healthcare industry is especially troubling for seniors who rely on these local practices for long-term care. Community oncologists have been hit particularly hard, and many have been forced to either close their doors or be bought out by hospital chains.

Seniors often prefer local clinics to receive trusted care during the most trying times in their lives. Clinic closures force seniors to travel longer distances to hospitals where they are often faced with greater out-of-pocket costs. This is unacceptable.

For seniors fighting cancer and other complex conditions, those obstacles become insurmountable and some drop treatment altogether. This situation is made worse given the fact that hospitals can charge Medicare more for the same treatment than local clinics. These higher costs are ultimately born by taxpayers and further weigh down a financially burdened Medicare system.

The 340B program is essential to the many low-income Americans who use it to gain access to quality affordable medicines. If the program isn’t reformed, however, hospitals will continue abusing the system, and seniors who rely on local community clinics for their healthcare needs will see even more of those clinics close.

Fortunately, there is a solution. Hospitals have taken advantage of the lack of proper government oversight, but common sense reforms to the 340B program can ensure government discounts are actually passed along to the patients who need them most. Reforms should aim to create a more efficient system that drives down costs for patients and taxpayers while preserving seniors’ critical relationships with their doctors.

Healthcare connects us all, but the system isn’t working for everyone. Doctors take an oath to “do no harm.” It is essential that lawmakers do the same, and work to ensure all Americans get the care they need while doing no harm. Reforming the 340B program would be a good start.  

Thair Phillips is president of RetireSafe, which is dedicated to ensuring that legislative agendas protect the quality of life and economic well-being of older Americans.


The views expressed by contributors are their own and are not the views of The Hill.