Fix drug discount program

Stephen Rapundalo

Improving health care for all Americans is a monumentally important and challenging task. Often, the finer policy details and decisions that can affect real, positive change within our health care system can get lost in the larger debate over how to most effectively improve access, increase quality and control costs. But these smaller policy reforms require our attention because they can greatly enhance our health care system overall.

As president and CEO of MichBio, the statewide biosciences industry association and a former pharmaceutical scientist tasked with discovering new drugs for heart disease, I can appreciate the challenges our leaders in Washington face when it comes to overhauling our nation’s health care system. However, they should look for opportunities to reform existing programs so they better serve Michigan’s and America’s most needy patients. One example is the lesser-known but critically important 340B drug discount program. I hope we can count on Sens. Debbie Stabenow and Gary Peters to help fix this broken program, so it can once again serve Michigan’s most vulnerable patients.

Created by Congress in 1992, the 340B drug discount program was intended to help lower prescription costs for uninsured, underinsured or otherwise vulnerable patients. The program works by requiring pharmaceutical drug manufacturers to offer qualifying clinics and hospitals deeply discounted prescription medicines. In turn, these participating health care centers — often known as “safety net” facilities because they serve a larger proportion of uninsured patients — are supposed to expand access to therapies and services.

Unfortunately, the 340B program is sorely lacking in federal oversight and is no longer functioning as it was intended. As a matter of fact, instead of helping lower-income, uninsured patients covered by Medicare or Medicaid, the program seems to be benefiting huge hospital conglomerates and large chain drug stores most.

There are certainly upstanding institutions here in Michigan that are responsibly and fairly participating in the 340B program, and I believe they should be lauded for their efforts. However, there are far too many bad actors that appear to be leveraging the program for their own financial gain.

Any reform made to 340B must clearly define who is an eligible patient, who can benefit from the reduced prescription drug costs the program provides. Both the Government Accountability Office and the Office of the Inspector General have said the term “patient” is not well-defined under current law. Clarifying this definition is vital to ensure participating hospitals are not profiteering from the discounts they receive for charity care.

Congress must also reform 340B by requiring greater transparency for all participating entities. While community health grantees participating in the program must align how they use savings from 340B with their federal grant requirements — reinvesting in needy communities and charitable services — hospitals are under no such obligation. However, hospitals aren’t required to disclose how these profits are being used, meaning they could go toward funding expenses that bear no impact on patient care.

The Health Resources and Services Administration, charged with overseeing the program, can’t simply rely on simply self-policing. Reporting requirements, including an account of how cost savings are used to reduce qualified patient drug costs and demonstrations of how program funds are being used, would go a long way in helping address this growing problem.

If action is not taken soon, the program will only continue to grow unchecked while patient costs — and hospital profits — continue to swell. Michigan’s senators should show the same dedication to the state’s most vulnerable patients that they did during this year’s health care debates, and work with colleagues to help fix the 340B program now.

Stephen Rapundalo, Ph.D., is president and CEO of MichBio.