Media & Insights

WSJ: The Biggest Scam Going is a Drug Discount Program Designed to Help Cash-scrapped Hospitals Serve More Poor Patients

The Wall Street Journal has done the world a service by blowing the whistle on one of the longest-held secrets in Washington – the 340B drug discount program is a lucrative profit-maker for rich, bloated hospital systems rather than a safety net for rural and inner city clinics that it was designed to be. Through multiple bipartisan administrations, no one has ever been able to bring greater transparency and accountability to this program because Congress, when it wrote the 340B law, did not explicitly grant the executive branch rule making authority. When administrations have tried to restore this program to its original purpose, they have been shot down in court. The program works like this: pharma manufacturers are required as a condition of participating in Medicaid, to offer their drugs at extreme hyper-discounts to certain pharmacies at health care facilities that serve the poor. These were originally intended by Congress to be AIDS clinics, community safety net clinics and inpatient pharmacies at inner city public hospitals. These facilities – called 340B pharmacies get to purchase the drugs at these steep discounts, but they’re allowed to keep the spread between what the charge for those drugs and what they paid for it. They don’t have to pass it on to patients, because the idea was that they needed the extra fat to be able to serve more poor, uninsured or underinsured patients. Instead, every corporate hospital and academic medical system has found ways to deem themselves 340B facilities and gouges patients at outrageous rates while themselves pocketing the pennies-on-the-dollar discounts for their own bloat.

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