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The unassuming names assigned to government programs never tell the story. The 340B Drug Pricing Program is a perfect case in point.  Far from encompassing a boring collection of regulations, 340B is a federal drug program second only to Medicare Part D in size. And the possibility of unintended consequences usually grows along with a program’s scope.

In an ideal world, the twin engines of government and commerce would work together for the common good. In the real world, however, even the best of intentions can go awry. The 340B program was designed to provide discounted drugs to hospitals and clinics that service high numbers of patients in financial need. In practice, the government is mandating large discounts and hospitals are turning around and charging a significantly marked-up price to sick patients.

It is unconscionable and needs to stop.

In 2018, a Government Accountability Office (GAO) report uncovered a disturbing lack of oversight in the 340B program, leading to widespread abuses. To date, the Health Resources and Services Administration (HRSA) has refused to implement the GAO’s recommended reforms. Not only that, HRSA continues to actively block drug manufacturers from enacting common-sense steps to ensure that the discounts are going to eligible patients.

One of those steps would be both simple and seismic: instead of offering 340B pricing as an up-front discount to hospitals and clinics, manufacturers should be allowed to first verify whether the organizations are eligible and in compliance with the laws governing the program. This single measure would reduce bureaucratic overreach and ensure that the program worked as intended, supporting true safety net providers and patients in need.

This should not be a controversial issue. When dealing with other federal health care programs, manufacturers typically receive detailed data before providing access to mandated or negotiated price concessions. 340B hospitals and clinics, however, have actively resisted providing the most basic data to support verification of appropriate pricing.

What do they have to hide? And why are so few people asking this question?

The 340B Drug Pricing Program should be called the 340B Drug Discount Giveaway. Boondoggles like this make a mockery out of genuine attempts to benefit society. In an op-ed for Real Clear Health, Howard Dean, former head of the DNC, put it well: “Corporate greed is a powerful motivator. When our lawmakers draft legislation, they really ought to have a special committee to evaluate how corporations might exploit it.” If an organization such as a hospital is on the receiving end of a government program and finds a legal way to use the program to advance its business, we have to expect that the organization will take advantage. The blame is then shared by the bureaucrats who look the other way.

Some manufacturers have tried to take their own steps to improve transparency and program integrity. Yet under the Biden administration, the HSRA threatened to remove those manufacturers from the 340B program, which would have resulted in their medicines being removed from Medicaid and Medicare Part B. And the HSRA has worked to impede the efforts of drug manufacturers to take reasonable steps to audit and dispute 340B claims.

The 340B program is just one of many reminders of the abuse and waste and that exists in Washington, D.C. When well-intentioned government programs are abused and stray far from their original purpose, our elected officials owe it to us to step in and fix the problem.  And that’s where we are with 340B.

Jack Kalavritinos is a former senior official at HHS and the FDA in two Administrations and founder of the Washington Health Innovation Council and JK Strategies.

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