We must fix federal drug discount program

By State Rep. Kim Schofield

Federally sponsored health care programs often start with the best intentions and have the potential to be successful in reducing the cost of quality health care across the nation.

The 340B Drug Discount Program was created by Congress in 1992. The program requires that prescription drug manufacturers provide deep discounts (often as high as 50 percent) on outpatient drugs to federally funded clinics and certain hospitals. These hospitals primarily serve uninsured and vulnerable patients.

Facilities are eligible for the program either by receiving one of 10 types of federal grants, or by being one of the six types of nonprofit hospitals that meet specific program standards, including disproportionate share hospitals (DSH).

There is no directive on where DSH hospitals should use the money they’re saving as a result of the program, and there’s also no directive that the money be used to enhance care or address medicine affordability for low-income patients.

Unfortunately, when programs such as the 340B Drug Discount Program are misused, such as by nonprofit health care systems that actually profit immensely and direct only a small portion of that money toward low-income patient care, it’s the patient who suffers.


Furthermore, this misuse is only continuing to grow. The 340B program has accelerated at just under 21 percent since 2010, and in the past three years has grown by 114 percent. As of 2018, 45 percent of all Medicare acute care hospitals are active participants in the program. The Health Resources and Services Administration (HRSA) reported just last year that in 2016, 340B-covered entities purchased more than $19 billion in drugs at 340B prices.

340B is administered by HRSA within the U.S. Department of Health and Human Services. HRSA has failed to set proper regulations in order to ensure that this program is used appropriately, rather than being misused by DSH hospital systems. Hospitals are not required to report how the savings are being used within the hospital – allowing that money to go virtually anywhere.

While the idea of the program is admirable, it has failed to do what it set out to do. Many DSH hospitals have taken advantage of the program by acquiring “child sites,” allowing satellite facilities to use the program without directly qualifying for the program. Just over 70 hospitals in Georgia qualify for the program, but plenty more are benefiting because larger hospitals are pushing out smaller practices from having access to the 340B program. This contributes to patients having fewer options for affordable health care while increasing hospital profits from the 340B program.

Patients in Georgia need fixes within the 340B program to guarantee that low-income patients are still receiving the same quality of health care as everyone else in the state. It is unacceptable to continue to allow DSH hospitals to save on prescriptions without ensuring the patients will benefit from those savings.

I fully believe that a program like 340B can benefit Americans not only in Georgia, but across the nation. In order to be sure that happens, we need to take action and fix the program to benefit patients first.

Rep. Schofield, a Democrat from Atlanta, is a health advocate and serves on the Health & Human Services Committee of the Georgia House.