A multi-billion-dollar 340B loophole needs reform. The 340B Program, as currently managed, is failing patients because it lacks accountability. There is growing concern that hospitals and pharmacies are not using the revenue from the 340B program to help patients. Unfortunately, a lack of transparency in 340B contributes to these integrity concerns — a failing program is at the expense of New Yorkers who need it most.
The New York State Senate is considering a bill, S.1913, that would impose stringent reporting requirements on manufacturers of medications. This is misguided given it’s the hospitals and pharmacies which are the stewards of significant revenue flowing through the 340B program yet they face no mandate to publicly report how they are using the savings to benefit patients.
It is our understanding some hospital chains are acquiring community hospitals in underserved communities as a way to access lucrative 340B discounts. A recent New York Times investigation exposed just how deep the problem runs. It revealed that a private company, Apexus, which administers 340B, has profited immensely from the program and siphoned off millions in savings meant for underserved patients. This raises critical questions about who truly benefits from the program. While originally designed to support hospitals serving low-income communities, the program has ballooned into a $66 billion industry where hospital systems and intermediaries capitalize on price differentials.
A lack of accountability allows for misuse and inefficiencies, undermining the 340B program’s original purpose. And instead of delivering much needed reform, lawmakers are continuing to shield those who capitalize on the program. The New York State Senate proposal takes aim at manufacturers and does not enforce adequate safeguards to ensure that savings are reinvested into patient care.
The 340B program is failing the very New Yorkers it was meant to protect, and it’s imperative that bills like S.1913 be recognized as red herrings––and not as solutions but as part of the problem.
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