Congress created the 340B program in 1992 with bipartisan support to allow health providers that serve large numbers of low-income patients to receive discounted medication from drug companies. In turn, these safety-net hospitals and clinics provide low-cost or no-cost medicine to the community.
The program also funds clinics for diabetes, HIV/AIDS, cancer, dental and primary care.
The law specifically allows safety-net hospitals to dispense discounted medicines to eligible patients and to sell them at negotiated rates to insured patients. Congress intended for these savings to stretch financial resources by augmenting low reimbursement levels from the Medicare and Medicaid programs to fund the services required to treat the underserved. This mechanism is hardly abuse — it is exactly the way the program was designed.
I should know. I helped write the law for Sen. Edward Kennedy two decades ago.
The pharmaceutical industry now wants to radically scale back 340B, although it accounts for only 2% of the U.S. drug market. Meanwhile, health care providers need the discounts to help treat our most vulnerable citizens. Without it, services and clinics for the underserved will be cut back or closed.
If the 340B program is dismantled, the losers are clear: America’s poor and the hospitals and clinics that serve them.