By Robert Popovian and William Smith
For various factors, a single federal drug program that accounts for tens of billions in annual spending has hit a tipping point in its evolution. The combination of legal disputes, a growing data repository and investigative reports have necessarily put the 340B Drug Pricing Program under the microscope. Combined with the fact that the policy lacks any necessary guardrails to ensure transparency and integrity for patients, 340B has spiraled out of control to the point that no policymaker can ignore the need to look closer.
Recently, a federal appeals court in Philadelphia admonished the Department of Health and Human Services for requiring drugmakers to provide discounted drugs to an unlimited number of pharmacies that contract with hospitals or clinics eligible for such federally required drug discounts. Under the so-called 340B Drug Pricing Program, drugmakers must give deep discounts to certain nonprofit hospitals and clinics.
When the program began in the early 1990s, those hospitals and clinics that did not have an in-house pharmacy could sign a contract with one outside pharmacy to distribute their discounted drugs. In 2010, despite no statutory provision concerning contract pharmacies, HHS permitted hospitals and clinics to contract with an unlimited number of outside pharmacies, and the 340B program exploded.
