How a Federal Drug Discount Program Really Works


Merrill Matthews’ Nov. 16 opinion column on the 340B drug discount program, “Congress Tries to Lower Drug Costs and Raises Health Premiums Instead,” arrives at a myriad of wrong conclusions. Mathews has a long history with the insurance industry that routinely raises health care costs and points the finger elsewhere. It would have been helpful if he had disclosed his industry affiliations and funding.

The spurious piece criticizes the 340B program created by Congress and President George H.W. Bush in 1992 to help hospitals and clinics that serve large numbers of poor and underinsured patients stretch their budgets to better treat this population.

Under the law, highly profitable drug manufacturers are required to provide these safety-net hospitals and clinics with discounted pricing on outpatient medications. In turn, the hospitals and clinics pass on a price break to low-income patients and other vulnerable populations.

Congress also intended for these healthcare providers to buy medicine at a discount, bill insurance companies for it at market rates, and then use the savings to improve and expand primary care and more complex and expensive treatment for cancer, AIDS, diabetes, and other diseases and conditions.

340B hospitals are not gouging anyone. Federal health officials have specifically stated that Congress intended for private insurers to reimburse 340B hospitals at normal rates when patients have private insurance. Congress wants 340B savings to accrue to hospitals and clinics that serve needy patients, not the multi-billion dollar insurance and drug industries.

Congress has expanded this important program with Republican and Democratic support because it works. Contract pharmacies were included in 2010 to bring discount medications closer to patients in their communities. The result? Patients take their medications and stay out of the emergency room.

While health care reform is well intentioned, too many Americans are falling through the cracks. This includes many hard working New York residents. The 340B program is more important than ever in helping health care providers serve our communities.

Ted Slafsky is the president and chief executive officer of Safety Net Hospitals for Pharmaceutical Access, an organization of 1,000 hospitals that serve a high volume of lower-income patients.

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