340B Drug Pricing Program could be vulnerable to exploitation

Right now, a group of hospital corporations are exploiting a federal program to give drug pricing discounts to non-profit medical centers that provide charity care for uninsured and low-income patients. The 340B Drug Pricing Program doesn’t explicitly define how the savings should be used and has broad eligibility criteria, leaving it vulnerable to exploitation.

A recent study released by the nonpartisan Pacific Research Institute (PRI) compared 340B hospitals to non-340B hospitals across eight different states and found “non-profit” 340B hospitals make 37 percent more in profits compared to the average of all hospitals, but these 340B hospitals that are supposed to provide charity care give 22 percent less of their net patient revenue to charity care than all hospitals.

The study also took a detailed look at Iowa’s hospitals. St. Luke’s Methodist Hospital in Cedar Rapids and Genesis Health in Davenport generated hundreds of millions in revenue and paid their executives huge salaries but spent low amounts on actual charity care. St. Luke’s made $33 million in annual profit for FY 2018 and paid its top executive more than $900,000 but spent only 0.19 percent of its net patient revenue on charity care. Genesis Health made $8.7 million in profit for FY 2019 and paid its top executive more than $1million. Yet Genesis Medical Center spent only 0.68 percent of its net patient revenue on charity care.

We should be finding ways to help low-income and uninsured folks access healthcare, not giving away discounts to hospitals that will hoard the savings for themselves. Congress needs to close 340B loopholes and downsize the program immediately.

Thad Nearmyer

Monroe