The original intent of the 340B program was presumably to enable under-financed care facilities to purchase drugs that would be used for the treatment of medically and financially vulnerable patients they served. The program does not require hospitals to only provide the discounted drugs to patients who are poor and in need, nor does it include a requirement that the savings on drugs be passed on to patients or insurers. Therefore, hospitals can use the discounted drugs with all of their “eligible” patients (except those receiving Medicaid).
When insurers and patients pay for the treatments as if the hospital obtained the drugs at list price rather than at the 340B-based discounted price, the hospital or treating physician practice can keep the profits generated. Likewise, contract pharmacies can retain the profits they obtain when they dispense discounted drugs to patients who are fully insured. A recent report suggests that a single practicing oncologist can generate about $1 million in profits for a hospital by obtaining drugs at 340B-discounted prices and using them to treat well-insured patients.
The 340B program drives down the acquisition costs of drugs but not their reimbursement. Therefore, it may be having paradoxical effects on the costs of patient care, in particular for patients with cancer, for 3 reasons.
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