Laws: Safety net drug program should aid Delaware patients
Jen Laws is the president and CEO of the Community Access National Network, a nationwide nonprofit that has been working to improve access to health care services and supports for people living with HIV/AIDS and/or viral hepatitis for 27 years.
Imagine a federal program that was designed to help vulnerable Delaware patients who are struggling to access care and adhere to their medications. Now, imagine that same program creating millions in profit for hospitals, consolidating far away from communities of need to expand into affluent areas — all while decreasing the rates of charity care for their patient populations who are spiraling into debt. This is the reality we face 30 years after the 340B Drug Pricing Program was created to be a safety net for low-income, underinsured and uninsured patients. Since its inception, there has been massive growth in the 340B program without accompanying evidence that it is actually benefiting communities in Delaware and across the country as intended.
The 340B program is inarguably well intentioned: The program was designed to enable nonprofit health care providers to purchase outpatient prescription drugs at discounted prices with the purpose that they would then use those savings to help patients, through offering care or medications at low or no cost, or increasing levels of charity care. In practice, however, hospitals are reaping a profit from 340B, while patient debt grows.
A Wall Street Journal analysis found that, in 2021, billions of dollars in 340B savings were siphoned away to hospitals. Rather than providing relief to patients, hospitals and some health centers leverage their 340B revenue to increase profits to expand their networks and boost services in wealthier communities. Data suggests that hospitals that joined the program after 2004 are more likely to serve wealthier and insured populations. Between 2011-19, the share of pharmacies contracted by 340B hospitals in the lowest-income neighborhoods declined by 5.6%, all while the share of 340B contract pharmacies in the highest-income neighborhoods increased. Thirty-eight percent of 340B pharmacies supposedly serving the poor are in affluent neighborhoods in Delaware.
Meanwhile, 73% of people owe debt to hospitals, and more than 10% of patients carry medical debt that inhibits other aspects of their lives. Patients carrying medical debt can see their credit scores drop, impacting their ability to finance a new home or car, and they avoid future medical care out of fear of increasing debt. Medical debt has also been linked to adverse health impacts, including an increased risk of suicide. Despite the devastating effect of medical debt on the public’s lives and finances, aggressive debt collection practices remain commonplace, as “nonprofit” hospitals align with debt collectors across Delaware and the country to chase bad debt.
The impact of medical debt on people’s lives has not gone unnoticed. The Biden administration recently announced a proposed rule that would ban medical debt from affecting credit reports, fulfilling a pledge by the administration to address the medical debt crisis. However, the Biden rule is unable to prevent “nonprofit” hospitals, including 340B-covered entities, from pursuing aggressive debt collection tactics, limiting protections for patients.
Falling rates of charity care across the country are further indication that the 340B program desperately needs transparency and accountability. In 2022, the average charity care ratio — or the percent of a hospital’s operating expenses going toward low- or no-cost care for patients — hit an 11-year low. The national average of charity care rates fell to just 2.8% in a decade, even while the number of participating hospitals in 340B grew to an all-time high. Delaware ranks far below the national average in charity care, at a mere 1.17% in 2022. Delaware patients deserve far more.
340B dollars are intended to support patient access to care, but exploitative behavior — such as foisting the financial burden of medical care onto patients and predatory debt collection practices — will only worsen as 340B grows without sufficient guardrails to protect patients. Policymakers in the Delaware legislature must act. Instead of increasing burdensome reporting requirements on grantees, who already report to federal regulators, legislators should focus on addressing growing medical debt, creating transparency for stakeholders, reducing hospital consolidation and creating accountability metrics for nongrantee entities, so that 340B works effectively for the patient communities it was intended to serve.
Reader reactions, pro or con, are welcomed at civiltalk@iniusa.org.
