Successful 340B Outpatient Drug Program a Bargain for Taxpayers

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Successful 340B Outpatient Drug Program a Bargain for Taxpayers

For 25 years, a highly effective but little-known program created by Congress—the 340B Drug Pricing Program—has allowed health care providers at safety-net hospitals such as ours, UC San Diego Health, to enhance and strengthen the care we provide to our communities and especially to vulnerable patients—all at no cost to taxpayers. This is because the 340B Drug Pricing Program enables qualifying hospitals, clinics and other providers that treat a significant share of vulnerable patients to purchase outpatient drugs at a discount from drug manufacturers.

At UC San Diego Health, like many other hospitals around the nation, we serve a critical role as a health care safety net, providing high-quality care to all patients, including those who are under-insured or uninsured. We provide the area’s only regional burn center, a comprehensive stroke center, one of only two Level 1 trauma centers, the only National Cancer Institute-designated comprehensive cancer center, plus primary and specialty care clinics, outpatient treatment programs and other services that are not widely available.

We use the 340B program discount from drug makers to help operate the Owen Clinic, one of America’s pioneering HIV primary-care clinics. The Owen Clinic offers a range of programs to address the many ways in which a person’s life may be impacted by HIV, including mental health services, nutrition services, drug and alcohol counseling, case management support, financial counseling and patient education.

These savings also allow us to care for underfunded cancer patients throughout the region and offer “med-to-bed” programs so that patients recovering from an illness can be counseled by a pharmacist at their bedside. Many patients benefit from the 340B Drug Pricing Program without even realizing it.

The 340B Drug Pricing Program is relatively small—representing less than 3 percent of $457 billion in total U.S. drug sales—but the benefits to safety-net hospitals and our patients are significant. It pays off in healthier patients in San Diego County and across the nation. And even with 340B discounts, drug companies achieve profit margins higher than most other industries. A recent U.S. Government Accountability Office report found that annual profit margins of the largest 25 pharmaceutical companies have increased approximately 15-20 percent since 2006.

Unfortunately, the success of the 340B program is being undermined. A government regulation that went into effect Jan. 1 cut annual Medicare funding to safety-net hospitals for 340B drugs by $1.6 billion (nearly 30 percent), further straining our ability to maintain appropriate and needed services to our patients and community. At UC San Diego Health, we worry that some of our patients could experience difficulty in accessing the life-saving services sustained by 340B discounts.

Thankfully, Reps. David McKinley, a West Virginia Republican, and Mike Thompson, a California Democrat, have introduced H.R. 4392, a bipartisan bill that would rescind these devastating cuts to 340B. They are supported by nearly 200 of their Congressional colleagues, including San Diego Representatives Susan Davis, Scott Peters and Juan Vargas. It is not often that so many members of Congress, representing both sides of the aisle, sign onto the same piece of legislation. Congress needs to pass this legislation now.

The 340B program is further threatened by a State of California budget proposal to eliminate the drug discount for Medicaid managed-care plans. If this proposal were to pass, 340B savings would steeply decline, increasing the funds that safety net hospitals would need to spend on drugs. The result would be fewer resources for important locally-focused programs.

The facts are clear: the 340B Drug Pricing Program provides big benefits without big government. Undermining 340B would not save taxpayers money and could mean patients and families in San Diego—and beyond—might not have access to necessary medical care. We must protect 340B—it’s a bargain for the country and a lifeline for hospitals and their communities.

To read the full article in the San Diego Times, click here.

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