340B Rebates: Make America Sick Again

The pharmaceutical industry just can’t stop coming up with new ways to kill the 340B Drug Discount Program. The latest tactic is rebates, which sound pleasant in theory but in practice would dramatically curtail healthcare services to millions of Americans in rural and red states.

A bi-partisan Congress created the 340B Drug Discount Program in 1992 to help safety-net providers stretch resources to serve more patients. It requires drug companies to provide upfront discounts of 20 to 50 percent to hospitals and clinics that serve high numbers of low-income patients. In return, Big Pharma won permission from the government to sell medicines into the monstrously lucrative Medicare Part B and Medicaid programs.

340B drug discounts have been a lifeline for rural hospitals, many of which hang by a financial thread. In states like Tennessee, Indiana, Iowa and Ohio, where safety-net hospitals treat thousands of low-income and working-class Americans, 340B drug discounts have been an indispensable healthcare lifeline.

Yet, even with support from 340B Drug Discounts, since 2010, more than 170 rural hospitals have shut their doors or ceased inpatient services. Specific offerings, such as obstetrics and chemotherapy, continue to vanish at an alarming rate.

Despite the severe reduction of health care providers in rural America, five drug companies have recently announced their intention to require rural hospitals to float loans to the big pharmaceutical companies through a mandatory rebate model. This devious model would supply the drug discounts, if approved, at the back end of the drug purchase. Even worse, those same companies would decide which scripts are eligible for 340B pricing.

Johnson & Johnson, Sanofi, Eli Lilly, Bristol Myers Squibb and Novartis have each announced their plan to require rural and red state health care providers to lend money to each of them through a mandatory loan rebate plan. In September 2024, the Health Resources and Services Administration bluntly warned J&J that it risked losing permission to sell into the Medicare Part B and Medicaid markets. The company quickly desisted but then filed suit claiming the agency is wrong. Since then, the four remaining companies have paused their rebate plans and joined the litigation.

Rebates would be terrible for healthcare providers and would make America sick again.  It would  give Big Pharma total control over the savings generated by the program. Drug companies could deny 340B scrip payments, literally stealing billions of dollars from hospitals and clinics.

Drug companies would also demand onerous and unnecessary patient information which would bog down providers already struggling with burgeoning healthcare demands.

The ultimate impact? Safety-net hospitals and clinics would have fewer resources to serve patients and financially strapped rural hospitals would close. Big Pharma would get even richer while degrading red-state America’s healthcare system.

Should wealthy pharmaceutical companies be allowed to enrich themselves at the expense of voters and families in disproportionally Red America?

Hell no.