n 1992, the federal government mandated discounted drug prices for certain “safety-net providers”. The purpose was to ensure that these facilities, which served low-income patients, could acquire medicines at low prices to dispense to those patients. The drug-makers finance the discounts.
The 340B program is a roundabout way to finance a welfare benefit. The primary beneficiaries are hospitals, although only outpatient drugs are discounted via the 340B program. Evidence suggests that the program has become a profit center for hospitals. The number of sites benefitting from the program has doubled in ten years, to 16,500 across the country.
Are we meant to believe that the number of poor people has doubled in a decade? Even in the Obama economy, that would be a stretch. On the contrary, hospitals’ persistent lobbying has resulted in ever-expanded definitions of “safety net”; and the accounting requirements demanded by the government are byzantine.
Read the entire column at NCPA's Health Policy Blog