OPINION: Federal 340B program needs dose of transparency in Ky

Expanding benefits is a contract pharmacy profit center at worker, employer expense

FRANKFORT, Ky — It should always raise an eyebrow when someone tells you something is “free.” Free typically means there’s a catch or that someone else is paying for it. And in the case of the federal 340B prescription drug program, that someone else is you and your employer in the form of increased co-pays at the pharmacy counter, growing annual insurance premiums and higher taxes.

Congress created 340B to help hospitals and clinics stretch scarce resources by allowing them to purchase drugs meant for low-income patients at significant discounts. From a small program intended to support safety-net providers, the 340B drug pricing program has grown exponentially into a massive arbitrage opportunity for corporate healthcare systems to drive up costs without meaningfully benefiting the vulnerable communities it was intended to serve.

Big healthcare systems have increasingly taken advantage of this to the point that today, 340B is the second-largest federal drug program behind Medicare Part D. In recent years, the limitless expansion of contract pharmacies in particular has turned 340B into a massive profit center for large hospital systems, pharmacy benefit managers (PBMs) and big chain drug stores.

This is not why Congress created 340B. And more importantly, Kentuckians are indirectly footing the bill whether they know it or not.

That’s because the 340B program is not “free” despite what some legislators in Frankfort like to claim.Patients, employers and taxpayers are forced to subsidize big health systems through the significantly marked up prices hospitals charge for prescription medications. For employer-sponsored health plans, which cover more than 2.18 million Kentuckians, 340B discounts displace manufacturer rebates on the same drug, raising costs for employers and workers.

340B has become a hot topic in the Kentucky General Assembly even though it is administered by the federal government. Some in Frankfort want to use state law to expand the program even further. Others like Representative Kim Moser from Northern Kentucky are wisely championing legislation (House Bill 685) that would study the program and shed critical light on just how 340B is being used.

HB 685 is crucial for understanding how 340B hospitals, clinics and contract pharmacies use the federal prescription program and how it impacts Kentucky’s working families and employers.

340B needs a big dose of transparency and HB 685 would do just that by allowing Kentucky to follow the lead of Minnesota and North Carolina, both of which have studied the fiscal consequences of 340B to their states.

The Minnesota report revealed the largest hospital systems — and not the health centers, clinics, and small rural hospitals — were mostly benefiting from 340B. In North Carolina, the State Treasurer found that 340B hospitals charged state employees massive markups for oncology medicines. And a recent national report further shows that passing pharmacy mandate bills like Kentucky’s Senate Bill 14 will increase cost to state employers by $98.8 million while costing taxpayers an additional $16.5 million annually.

While HB 685 is a critical measure to ensure Kentucky’s 340B providers are not taking advantage of the program, comprehensive reform must ultimately be addressed by Congress. And Kentucky legislators should be asking their counterparts in Congress to pass 340B reform immediately.

Given the tremendous burden that the 340B program places on working families’ paychecks and employers’ bottom lines, the federal government must rein in the program’s unchecked expansion. Real reform would include provisions that improve transparency to ensure that bad actors are not abusing the program and refocus benefits on low-income patients while ensuring that working families and employers don’t see increased healthcare costs.

Thankfully, Kentucky has strong leaders in Washington, including Congressman Brett Guthrie who chairs the powerful House Energy & Commerce Committee which has purview over the 340B program. Congressman Guthrie has long been a champion of transparency and helping working families afford quality healthcare and we encourage him to keep the fight going to bring much needed transparency to 340B.

By: Jenny Goins who is the Chief of Staff at the National Alliance of Healthcare Purchaser Coalitions. She is the former Commissioner for the Kentucky Employees’ Health Plan, with 290,000 members, the largest self-insured health plan in the Commonwealth.