Connecticut hospitals provide care to all patients, regardless of their ability to pay, and invest millions in addressing community health needs. Despite facing negative operating margins —spending more on providing care than the collective reimbursement from government programs and health insurance companies—exacerbated by rising costs, including drug expenses, Connecticut hospitals continue to offer essential services and community benefits.
Programs such as the federal 340B Drug Pricing Program help support this ongoing work. Section 340B of the Public Health Service Act, which has been around for more than 30 years, requires pharmaceutical manufacturers participating in Medicaid to sell outpatient drugs at discounted prices to qualifying healthcare organizations.
Federal programs like 340B are vital because they enable hospitals and other healthcare providers like community health centers to support vulnerable populations by maximizing limited federal resources to provide critical services. The 340B program benefits help support millions in free care and community investments. It is critical that such programs helping hospitals provide care and community support are sustained, and are not undercut to the detriment of patients.
In Connecticut, the 340B program has helped support $3.4 billion in community investments in fiscal year 2022, including more than $1.2 billion in unreimbursed care for low-income Medicaid beneficiaries, $1.5 billion in unreimbursed care for Medicare beneficiaries, nearly $270 million in uncompensated care, and millions in community investments — all of which are provided by hospitals across the state. Hospitals are able to support their critical financial assistance policies, which provide free and reduced-cost care, in part due to 340B program benefits, to ensure that inability to pay for services does not deter anyone from seeking needed medical care.
Cancer care is one of the many medical needs that 340B helps to address and includes screenings for breast, skin, lung and prostate cancers. The program also helps support medication assistance programs, transportation for patients to and from medical appointments, and vans that go into the community to provide pediatric dental services.
Unfortunately, we have seen national drug manufacturers try to undermine the 340B program to evade their legal responsibility to provide discounts that benefit vulnerable populations served by hospitals.
Drug manufacturers have been fighting in the courts to erase 340B contract pharmacy flexibility, which allows hospitals to use pharmacies in the community to dispense drugs on their behalf. Drug manufacturers have also tried to put more and more requirements on the program to their benefit and to the detriment of patients and their access to care.
For example, Johnson & Johnson tried to eliminate discounts and require hospitals to purchase drugs at full price and then put the burden on hospitals to pursue a rebate, squeezing hospitals and health systems that depend on the rebates to provide care for underserved patients. The federal government warned Johnson & Johnson they would be violating the 340B statute and ordered them to cease implementation of the rebate scheme. Johnson & Johnson finally relented after the threats but is now suing the federal government.
With so much talk around 340B, it is important to understand the vast impact of the free and reduced cost care and community investments provided by Connecticut hospitals that would not be possible without these critical drug discounts from the profitable pharmaceutical industry. In our state, 340B program benefits support direct care to patients, removes barriers to healthcare access, and strengthens community health. It is essential that we work together to protect this program, and the care that it enables hospitals to provide every day in every community.
Paul Kidwell is Senior Vice President, Policy at the Connecticut Hospital Association.