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“President Biden’s call during his State of the Union address for Congress to pass legislation to control drug prices provides a good opportunity to note a law that already is on the books that helps curb drugmakers’ price hikes. As lawmakers prepare to debate the proposals, it is a law worth protecting. Congress created the 340B drug pricing program in 1992 through bipartisan legislation that offered a simple tradeoff. If drug companies wanted access to lucrative Medicare and Medicaid drug formularies, they had to agree to provide certain outpatient drugs at a discount when selling to safety-net hospitals, health centers, and clinics.
Nearly 30 years later, more than 700 drugmakers have signed agreements to do just that. 340B reduces the prices paid by safety-net hospitals, community health centers, and public health clinics for outpatient drugs. These providers use the savings they obtain from the manufacturer discounts to cover the cost of care for patients with low incomes and those who live in rural communities. Drug companies – and not taxpayers – finance this care for millions of patients who otherwise could not afford their care.”