Virginians often have to choose between paying high health care expenses and their daily living costs at the gas station and grocery store. As a clinic worker in Tysons Corner I understand how vital it is that patients with chronic illnesses receive the care they require when they need it. One federal program, which was designed to provide needed medicine for underserved Virginians, is being abused by large hospital networks at the expense of patients and independent clinics.
The 340B program, which is a little-known initiative, was created to improve access to treatment for communities with low incomes and no insurance. Through 340B eligible hospitals and clinics are able to purchase discounted medications directly from manufacturers, with the hope that the savings will be used to help patients get medication or invest in charity.
What was once a good-intentioned initiative has become a hospital markup scheme to our detriment. A lack of transparency and accountability has led to large, tax-exempt, hospitals participating in the 340B program to use it to generate significant profit by purchasing drugs at a discounted price and then charging their patients and insurers inflated rates. A study published in the New England Journal of Medicine found that hospitals participating in 340B have a seven-fold increase on medicine prices compared to independent clinics. This would mean that large 340B hospital gross profits are 20 times higher than our clinic. For every $10 in profits that the most successful 340B hospitals earn, only $1 is spent on charity care. In Virginia, each disproportionate share hospital which is the majority of hospitals participating in the 340B Program, earns from the estimated 340B profits more than they spend on charity care.
These markups are a hidden tax which increases costs in the entire health care system. Patients, employers, the taxpayers, and the government all have to pay more when hospitals mark up discounted treatment and bill their patients and insurers. The 340B Program increases the cost of employer sponsored health plans by $5,2 billion per year. This leads to lower profits and wages for Virginia businesses and their employees. In addition, the state governments lost $2.3 billion last year due to Medicaid rebates. The states incur increased costs for Medicaid recipients due to this loss of savings. This increases the burden on taxpayers and state budgets.
Independent providers are caught in the middle as 340B-hospitals continue to abuse the program by purchasing low and billing higher. The ability of eligible hospitals to make a large profit from 340B gives them the upper hand on the market. This creates an unfair advantage and makes it difficult for other hospitals and clinics that are not 340B accredited to compete. This could lead to the closure of independent clinics and a consolidation in our local healthcare system.
Virginians with chronic illnesses, like rheumatoid arthritis, Crohn’s, or multiple sclerosis need affordable and consistent care to manage their symptoms and live healthy lives. It’s evident that the large 340B systems prioritize a model of “profit before patients”, putting profit over helping patients who are in need.
A groundbreaking investigation revealed that Bon Secours Mercy Health in Richmond, a major chain of health care, took advantage the 340B Program through Richmond Community Hospital. The hospital is a cash-strapped community primary care facility located in Richmond’s East End. Bon Secours Mercy Health generated more than $100 million through its 340B status while destroying critical health services in the Richmond hospital. This included their intensive care unit.
The 340B Program is in need of reform. It needs to be improved to increase transparency and accountability so that patients can benefit from it as intended. I urge Congress now to act to put an end to unchecked profits, lower health care prices for Virginians and protect the viability local, independent clinics such as the one where I work. Virginians are suffering from high healthcare costs. The 340B program reform is an easy way to improve our local health system and increase access to care.
Michael Pearl, the business manager of Tysons Therapeutics in Tysons Corner Virginia , is a member of the Tysons Therapeutics team.
The original Cardinal News article, Clinic Manager to Congress: Rein In Federal Program Raising Health Care Costs for Virginians, appeared first.
