We need 340B

This effective drug-savings program is not only a lifeline for low-income patients, argues the CEO and president of Rhode Island’s largest health system. It's also a bargain for the country.
Woman getting blood pressure checked while holding son in her lap.
Ruby Partin and her adoptive son visit a free health clinic Wise, Virginia, in 2017. Hundreds of Appalachia residents attended the annual Remote Area Medical clinic for dental, vision, and medical services. (Photo by John Moore/Getty Images)

Editor’s note: The opinions expressed by the author do not necessarily reflect the opinions of the AAMC or its members. A version of this piece originally appeared in the Providence Journal.

Lifespan’s hospitals, like many hospitals around the nation, serve a critical role as a health-care safety net, providing high-quality care to all patients, regardless of their ability to pay. We provide vital, one-of-a-kind services for our community, including a trauma center, a burn unit, cancer programs and children’s programs.

For 25 years, a highly effective program created by Congress, the 340B Drug Pricing Program, has allowed safety-net hospitals like ours to help provide care to the most financially disadvantaged residents of our state at no cost to taxpayers. How? In the 340B program, qualifying safety-net hospitals like ours are allowed to purchase many drugs at a discount from drug manufacturers. In turn, we are required to use these savings to provide and expand programs that benefit all our patients, particularly the most needy and vulnerable.

Examples include healthy weight and nutrition programs, cardiac health services, adult psychiatry, early intervention for children, health education programs, and free naloxone for opioid overdose management. The greater the savings Lifespan receives from programs like 340B, the more we can continue to provide, expand and innovate for our patients and community.

The greater the savings Lifespan receives from programs like 340B, the more we can continue to provide, expand, and innovate for our patients and community.

The 340B program is relatively small — representing less than 4% of the $457 billion in total U.S. drug sales — but the benefits to safety-net hospitals and our patients are crucial. And even while providing the 340B discounts, drug companies are still achieving profit margins higher than most other industries.

No one would contest the important role of pharmaceutical companies in patient care, but the profit contrast is stark in that our margins are razor-thin. A recent report from the Government Accountability Office shows that annual profit margins of the largest 25 pharmaceutical companies have increased between 15% and 20% since 2006.

Unfortunately, the success of the 340B program is being threatened. A government regulation that went into effect on Jan. 1, 2018, drastically cuts Medicare payments to safety-net hospitals — by $1.6 billion annually for their 340B drugs. The impact on Lifespan is a loss of more than $4.8 million in previous drug-cost savings.

These reductions, coupled with other state and federal cuts, are straining our ability to maintain the services we provide to our patients and community.

The facts are clear: the 340B program provides big benefits without big government.

Thankfully, there is legislation in the House of Representatives that reflects an understanding of the importance of the 340B program by attempting to rescind these devastating cuts. With almost 200 co-sponsors in the House, the legislation is critical not only for our patients and community but also for Congress to reaffirm the original vision of the 340B program: allowing hospitals to “stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.”

The facts are clear: the 340B program provides big benefits without big government. Simply put, undermining 340B, as the new federal regulation does, would not save taxpayers money. We must protect 340B — it’s a bargain for the country and a lifeline for hospitals and their communities.