I’m the founder of a 501c3 non-profit called Songs and Stories for Soldiers, Inc. that currently works in 71 Veterans Administration hospitals, outpatient clinics, homeless shelters, and veterans centers across the country. We assist in the treatment of PTSD, sleep deprivation, suicide prevention, end of life care, and many other conditions. We have distributed almost 13,000 MP 3 players to vets, and active duty soldiers who are transitioning to civilian life. I present this as background because making sure that our vets, I am one, get what they are entitled to is very important to me. The abuse in the 340B Drug Discount Program is affecting my veterans.
Three Card Monty is a street gambling game that many people think they can beat. The shark has three playing cards and he entices people on the street to try and find the right card for the money. If the mark picks correctly, they can win 100% on their money, “Five will get you ten.” The goal is to let the mark win, increase his bets, and then lose all his money. It is a game of chance, but hospitals that are abusing the 340B Drug Discount Program are playing their version of Three Card Monty. The hospitals are not taking much risk, but they are reaping significant or perhaps obscene rewards. Their Three Card Monty game is using our money that was designed to help veterans and people without insurance and instead, is using it for people who can afford to pay.
Congress created the 340B Drug Discount Program in 1992 to help vulnerable or uninsured patients gain access to prescription medicines at safety net facilities. When the law was passed, there were 90 designated facilities in the United States. These “designated facilities” served a high number of uninsured or vulnerable patients, like many veterans. The government pressured big pharma to cut their prices on expensive drugs, in some cases as much as 50%, so the safety net hospitals could service the needy.
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Here is how the “Three Card Monty” comes into play: the drug companies don’t provide drugs directly to the sick. Doctors write a prescription and the hospital pharmacy of one of the designated facilities fills it. The hospital buys the medications at a 50% discount from the 340B program and then charges full price to the patient. The Berkeley Research Group reports that the 340B Drug Pricing program now amounts to almost 8% of the total branded marketplace. The 340B sales will reach $29.6 billion in 2017, up from $12.8 billion in 2012. Here are three examples of the Three Card Monty profits:
Duke University Hospital purchased $65.8 million worth of drugs through the 340B program, from which the hospital made an additional $48.6 million in profit.
Palmetto State Hospital in South Carolina made $1.1 billion from the 340B program in 2013, a 70% increase over 2011.
Emory HealthCare of Atlanta found a way to get 340B pricing at all of its outpatient cancer clinics, including those in affluent areas.
The original goal of the program was to target 90 hospitals that served the poor and uninsured, providing better health outcomes. However, the 340B plan is now in 10,000 hospitals, clinics and pharmacy chains across the nation, but many needy and uninsured persons are not participating in the program as intended.
Then along came Obamacare and things got totally out of control. Kathleen Sebelius, former Secretary of the Department of Health and Human Services, testified before the Senate Finance Committee in 2014 regarding the President’s fiscal year 2015 Healthcare proposals. Regarding the 340B program, she stated, “It has expanded beyond its bounds.”
President Trump has spoken on many occasions that drug prices in the United States are driving up the cost of healthcare. The abuse of the 340B program is one of the reasons prices continue to go higher. When the hospital can buy a drug at fifty cents on the dollar, which is supposed to go to the poor and uninsured, and then turns around and sells the drug to well-to-do patients for 100 cents on the dollar, they are cheating the people the program was intended to help.
It is time for Congress to revisit 340B and ensure it is helping the patients it was meant to serve. There is a golden opportunity for Congress to remedy the 340B program and return it to its noble purpose: to create better health outcomes for the neediest patient populations. This program should be modernized by limiting program participation to medical sites that serve vulnerable and uninsured populations and by clearly defining eligible patients, including my veterans.