Drug Makers Steal $8B from America's Healthcare Safety Net
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16 Nov Drug Makers Steal $8B from America’s Healthcare Safety Net

Every day, Big Pharma steals millions from America’s safety-net healthcare providers. It amounts to a giant, illegal ATM machine that’s illicitly disgorged more than $8 billion in revenues so far.

How have they gotten away with this? By working against the 340B Drug Discount Program. Created by Congress in 1992, 340B was designed to make lower-priced medicines available to nonprofit hospitals and clinics that treat high numbers of low-income patients. In return, the drug industry was given permission to sell into the phenomenally lucrative Medicare and Medicaid markets.

In 2021, the US drug industry brought in $550 billion in revenues. But it still wanted more. So it began refusing to provide legally mandated 340B discounts to hospitals that work with community pharmacies. The higher prices are leading to hospital shortfalls that have direct impacts on patient care.

A recent report from the hospital group 340B Health lays bare the damage being done to America’s safety net as a result of the estimated $8.4 billion in losses: “Examples include trauma, burn units, behavioral health, and obstetrics. One hospital reported closing outpatient behavioral health services, another cut funding for 19 school-based clinics, and another closed a rural health clinic.”

Drug makers are also sidestepping mandatory price limits by denying discounts, says the report. Under the 340B law, drugs with price tags that grow faster than inflation can be subject to pricing at .01 cent per script. “Skirting these penalties removes an important constraint on price increases. $4.6 billion of the contract pharmacy savings on restricted drugs is accounted for by [penny]-priced drugs.”

Big Pharma’s money grab puts rural hospitals, many already in peril, particularly at risk as they face tough economic pressures and labor shortages. “Without 340B savings, hospitals like ours would have to take extreme measures just to keep our doors open to the largely rural, underserved communities that we serve,” writes Craig Thompson, CEO of Golden Valley Memorial Healthcare in Missouri.

It’s just pathetic, and too few in Congress are fighting for the safety-net systems in their communities. The drug industry has spent $20.7 million lobbying Capitol HIll so far this year. That’s the third largest expenditure behind the US Chamber of Commerce and the National Association of Realtors.

The money appears to be well spent as Congress continues to turn a blind eye to pharma’s 340B theft.

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