There are more than 3,200 new medicines in development across the U.S. These breakthrough treatments promise to improve and save lives in this country – especially for the 30 million Americans affected by rare and genetic diseases – but only if American patients can afford them.
Unfortunately, many can't. They're uninsured, low-income or otherwise financially vulnerable.
This is precisely the problem Congress was aiming to address when it created the 340B drug discount program. Passed in 1992, 340B requires pharmaceutical manufacturers to offer steep discounts to health care providers that serve low-income patient populations. These hospitals and clinics were then expected to pass along the discounts to customers.
The idea behind 340B is a good one. But the real-life program has major flaws that have turned it into a cash cow for well-heeled hospitals and medical clinics. The end result is the exploitation of this program, creating increased profits for health care providers while doing little to aid the vulnerable patient populations 340B was supposed to help.
The crux of the problem is simple. 340B does not explicitly require that participating health care providers pass along all discounted medications directly to vulnerable patients. There's no hard-and-fast mandate.
A facility can buy drugs at a discount through 340B and then sell those same drugs at full price to insured patients – not the program's intended target population. In fact, an extensive investigative report by the Health and Human Service Office of the Inspector General found that some participating facilities “do not offer the discounted 340B price to uninsured patients” at all.
Expansions of 340B have only made the problem worse.
Back in 1996, a participating hospital or clinic without an in-house pharmacy was allowed to contract with an independent pharmacy in order to dispense discounted drugs. But providers were limited to establishing just one such relationship.
That changed in 2010. Officials now allow 340B providers to use an unlimited number of outside pharmacies. As a result, the number of contract pharmacies has dramatically increased, growing by 700 percent from 2010 to 2013. Drug sales through 340B have likewise skyrocketed, from $6 billion in 2010 to a projected $12 billion in 2016.
In theory, expanding the use of outside drug dispensers would make it even easier for the targeted low-income patient population to fill their prescriptions. But this growth has not corresponded with a substantial expansion in poor Americans' access to needed medications.
Worse, when drug manufacturers are forced to sell more and more of their product at a discount under 340B, they can't reinvest as much in cutting-edge biopharmaceutical research. If medical innovation stalls, patients suffer, especially the one in 10 living with debilitating rare diseases.
Right now, 95 percent of these conditions don't have a single drug approved by the Food and Drug Administration. For the 30 million Americans with rare diseases, advanced drug development is the only hope for effective treatments and healthy lives.
If it were operating correctly, 340B could be a highly effective means of providing vulnerable Americans needed medications. But 340B is failing in its mission. Instead of helping the uninsured gain access to much-needed prescription drugs, it's just helping hospitals get rich. This program is in urgent need of reform.
Andrea Epstein is the executive director of Global Genes, a leading rare-disease advocacy organization working to eliminate the challenges of rare disease worldwide.