Your recent opinion piece on the 340B drug discount program (December 18, “Drug discount program remains vital to support healthcare services”) provides a somewhat deceptive picture of the 340B program.
There is no doubt that there are hospitals who rely upon the program to provide charity care to underserved populations. According to data from the RAND Corporation, Bridgeport Hospital provides charity care to its surrounding community that is double the state average.
On the other hand, wealthier hospitals, such as Yale New Haven, provide less charity care than both the state and national averages. Moreover, the 340B program has incentives that make it more lucrative for hospitals to serve wealthier patients because the health plans of fully insured patients will reimburse hospitals at market prices while hospitals can buy drugs at much lower prices, allowing hospitals to “pocket the spread” from fully insured patients.
For this reason, according to federal data, pharmacies that contract with 340B hospitals in Connecticut are more likely to be located in high income neighborhoods (60%), with only 40% of these pharmacies located in lower income neighborhoods.
Finally, under the 340B law, there is no requirement that the discounts that hospitals receive get passed onto patients; this should be required.
I recognize that there are hospitals and clinics that are financially stretched because they provide significant community benefits and receive paltry reimbursements from government programs. But there are also some institutions that benefit handsomely from 340B revenues, do much less work in the community and tend to serve wealthier patients.
William S. Smith, PhD is a Senior Fellow at the Pioneer Institute, Boston.