Health Care

Michael Carnuccio | September 4, 2015

Free Market Friday: Some abuse program for the poor

Michael Carnuccio

While accounts of the lives negatively affected by the numerous failed promises of the Affordable Care Act mount each day, an alarming story of abuse of a program (which was expanded by the ACA) intended for the poor has gone largely unnoticed.

One of many health care programs funded by taxpayers is the 340B discount program. In short, the program is a part of the Medicare program that was created by Congress in 1992 to help expand access to medical drugs to those with low incomes. The program requires pharmaceutical manufacturers that participate to provide significant discounts to their drugs so that the poor can have greater access to medication. A recent comprehensive report by the Government Accountability Office found that there has been significant abuse of the program, which has hurt the poor and taxpayers.

According to the GAO, “Approximately 40 percent of all U.S. hospitals participate in the 340B Drug Pricing Program, and the majority of 340B discounted drugs are sold to hospitals. Medicare reimburses hospitals for Part B drugs under a statutory formula regardless of the prices hospitals paid for the drugs.”

The GAO’s findings are pretty alarming. According to the report, “GAO found that in both 2008 and 2012, per beneficiary Medicare Part B drug spending, including oncology drug spending, was substantially higher at 340B DSH hospitals than at non-340B hospitals. This indicates that, on average, beneficiaries at 340B DSH hospitals were either prescribed more drugs or more expensive drugs than beneficiaries at the other hospitals in GAO’s analysis. For example, in 2012, average per beneficiary spending at 340B DSH hospitals was $144, compared to approximately $60 at non-340B hospitals. The differences did not appear to be explained by the hospital characteristics GAO examined or patients’ health status.”

The cumulative effect has been big bucks for special interests. Oklahoma’s own Dr. Doug Beall and other champions for lowering the cost of medical care are standing up to the special interests and sounding the alarm. Not surprisingly, some of the greatest advocates for the ACA’s doomed-to-fail Medicaid expansion are some of the offenders who have abused the 340B program.

The failures of the 340B program should be a lesson to policymakers. Be wary of those who boast of their “nonprofit” status and their desire to help the poor as long as they have “Caesar’s” assistance.

Michael Carnuccio

Former OCPA President

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