Better Solutions for Healthcare

Real Clear Health: Hospitals Are Gaming the 340B Drug Program

By Jerry Rogers

May 21, 2020

The COVID-19 crisis has been a brutal lesson on the limitations of government action and imagination. The response, thus far, has been a ‘business as usual’ expansion of entitlements and interventions in an attempt for the government (programs, loans, direct payments, welfare, food assistance, etc.) to take the place of private sector activity. It has not worked.

Many Americans have yet to receive their ‘stimulus’ checks (even as dead Americans have received their checks); too many small business have shuttered never to reopen while elite institutions with huge endowments, like Sidwell Friends, have received millions of dollars from the Paycheck Protection Program (PPP). The PPP was intended to save jobs and support small businesses from going under because of the crisis. Unfortunately, the PPP has not worked out exactly as it was intended. What’s more, many thousands of Americans are still waiting for their Unemployment Insurance claims to be processed (after weeks of frustration). We have furloughed doctors and nurses in hospitals nationwide while the Federal Reserve reports that 40% of those earning less than $40K per year have lost their jobs.

Too many governors, mayors, and county executives shut down their economies with no real plans on how to reopen—the reasonable 15 day ‘stay-at-home’ orders to flatten the COVID-19 curve have turned into months of ‘stay home until we’re safe’ demands. Well, we will never be safe; yet life must continue. The COVID cure is worse than the disease.

Such problems with government inefficiencies and failures are not new. As government grows, so does abuse and cronyism. However, now with the COVID crisis and the economic and public health devastation, policymakers must begin to reexamine government programs—especially in the health sector. Hospitals are reporting historic revenue losses and furloughs due to the lockdown orders. Ironically, to save our health systems from being over-run with COVID patients we have shut down other aspects of our health care systems – checkups, tests, prenatal visits, transplants, vaccines, emergency care after heart attacks and strokes. Our health delivery systems are damaged, and Coronavirus has exposed and amplified the cracks in American health care.

This COVID-19 hospital crisis comes on top of America’s preexisting hospital capacity catastrophe. As the Washington Post reported, the hospital capacity crisis is “a result of consolidation over the past 30 years that concentrated our health-care system in wealthy cities and suburbs, where the prevalence of expensive insurance plans allowed big health systems to rake in profits. There have been more than 680 hospital mergers over the past decade, a trend that is likely to accelerate in the coming years. It involves mergers between hospital systems, as well as large hospital conglomerates’ takeovers of rural hospitals, physician offices, ambulatory surgical centers and other outpatient clinics.”

Post COVID-19 is not the time for lobbyists and insiders to game the system for the politically well-connected and powerful. It is past time to examine America’s hospital capacity and revisit the policies that allow for the hospital industry to leverage programs intended to help underserved communities.

The 340B drug-pricing program is a textbook example of how insiders, lobbyists, and influence-peddlers high-jacked an obscure provision of law and turned it into a profit-making racket. For three years, the Trump administration has made attempts to reform the program….