A new study reveals that 340B hospitals in Illinois and across the nation are misusing a federal drug pricing program.
The 340B Drug Pricing Program, established in 1992, aims to help uninsured and vulnerable patients access affordable medications. Through this program, drug manufacturers offer discounted medications to eligible hospitals and clinics.
The Alliance for Integrity and Reform 340B (AIR340B) discovered that some hospitals are retaining these discounts for profit, turning the 340B program into a significant profit source for pharmacy chains, hospitals, and intermediaries like pharmacy benefit managers.
Nicole Longo, a spokesperson for AIR340B, emphasized the need for program changes.
“We believe that if hospitals buy medicine at a discount, low-income patients should also benefit from those discounts. Additionally, there should be clearer rules about hospital qualifications for the program,” Longo said.
AIR340B found that in 2022, hospitals accounted for 87% of 340B purchases, but they are not required to report their 340B profits or how the revenue is used to reduce patient costs. They also noted that Illinois 340B hospitals earn over 2.5 times more in 340B profits than they spend on charity care, with 69% of these hospitals providing below-average levels of charity care.
The report shows that only 37% of Illinois hospitals reviewed comply with drug price transparency.
Additionally, 340B hospitals in Illinois have 4,287 contracts with 340B pharmacies, 19% of which are with out-of-state pharmacies.
In May, U.S. House Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-Washington) and Subcommittee on Oversight and Investigations Chair Morgan Griffith (R-Virginia) announced a subcommittee hearing titled “Oversight of 340B Drug Pricing Program.”
“It’s crucial to maintain patients’ access to important and life-saving drugs. We need to ensure the 340B program functions as intended,” said Chairs Rodgers and Griffith.