340B doesn’t solve health inequities

By Amy Hinojosa

Advocates have long fought for federal funding to reach people in most need. Back in 1992, Congress established the 340B drug pricing program, which guaranteed drug discounts to hospitals serving a disproportionately high percentage of uninsured or low-income patients. 

Congress hoped the legislation would help hospitals provide better, less expensive care. But the enabling legislation and subsequent implementing regulations did too little to ensure that outcome. Instead, hospitals and clinics are wielding 340B against the very people lawmakers wanted to help.

That’s because federal law doesn’t require hospitals to reinvest their 340B savings in vulnerable communities. Instead, many of these facilities charge patients top dollar while keeping the discounts for themselves. 

Take for example, Bon Secours Mercy Health — a nonprofit hospital chain — that raked in almost $1 billion in profits last year, according to a recent New York Times report.

Federal law actually makes it easy for hospitals to rip off their most vulnerable patients while directing inordinate resources to high-income, largely white communities. It’s time for Congress to put an end to this flourishing scam by revising the law that makes it possible. 

Congress must address the fact that numerous facilities that don’t actually serve low-income communities qualify for 340B. Clinics belonging to the same hospital chain as a disproportionate-share facility can often register for the program — even if their clientele is generally well-off, with good insurance. 

Unsurprisingly, hospitals and clinics have signed up in droves for the free money. The total number of participating facilities surged from 8,100 to 50,000 between 2000 and 2020. More and more of them are located in high-income areas — which means wealthy communities are benefiting from a program intended for the underprivileged. 

As of 2021, uninsured patients made up about 9% of the U.S. population. These are exactly the marginalized groups, often racial minorities, the 340B discounts were supposed to help. Instead, these patients face the prospect of hospital bills of hundreds or even thousands of dollars for a single drug.

Cancer treatment, for example, has become a massive money-maker. According to a recent analysis from the Community Oncology Alliance, disproportionate-share hospitals often sell their top oncology drugs at 4.9 times the discounted 340B acquisition price. For one drug, the average markup was 11.3 times the discounted cost.

Meanwhile, about three quarters of private nonprofit hospitals earn more through tax breaks than they expend in charity and community investment. The Lown Institute Hospitals Index found that in 2019, the value of the nonprofit tax breaks enjoyed by 227 private nonprofit hospital systems totaled $18.4 billion more than those systems spent on “charity care and community investment.”

Disparities like these won’t end until Congress enforces its supposed intention to create a program that actually helps low-income communities. Today, the 340B program does no such thing.

Amy Hinojosa is the president and CEO of MANA, a national Latina organization, the oldest and largest Latina membership organization in the United States and founding member of the Health Equity Collaborative. A longer version of this piece originally ran in the Richmond Times-Dispatch.

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