Don’t believe drug companies: 340B is a program worth saving

Here we go again: An op-ed column printed in this publication is yet another example of a drug company-focused view on the 340B Drug Pricing Program, couched in the language of reform.

Its criticisms apply a familiar formula. First, start with presenting drug company-funded research as if it is non-biased. Next, use misleading statistics to accuse safety-net providers of abusing the program. After that, offer faux concerns about wanting to protect medically underserved patients.

Then go even further: Blame nonprofits for the 340B savings siphoned off by pharmacy benefit managers. Finish it all off by sprinkling in quotes from activists who have direct relationships with drug companies or organizations that have represented them. And voila, you have a smear with the veneer of legitimacy.

All of the drug industry’s criticisms and so-called 340B “reform proposals” culminate in one goal, which is to limit the number of prescriptions available at 340B prices. This would inevitably prioritize drugmaker balance sheets over the clinical outcomes of vulnerable Americans.

The AIDS Healthcare Foundation, where I am the national director of advocacy, is the nation’s largest nonprofit focusing on the health and well-being of people living with HIV. Currently, we have over 100,000 patients in care. As a federal grantee of the Ryan White HIV/AIDS Program, we use the 340B program just as Congress intended — to stretch scarce federal resources in a way that reaches more patients with more comprehensive services.

In many cases, AHF is our patients’ primary care provider. Contrary to claims made by 340B critics, we are not sitting on record-breaking profits. Unlike drug companies, we are not focused on turning a buck.

Even more importantly, unlike federal healthcare entitlement programs, AHF’s use of 340B does not cost American taxpayers a single dime. 

Nonprofits like AHF reinvest the savings from 340B drug discount purchases into our healthcare mission. None of the margin achieved from the savings ends up in the pockets of corporate executives or in dividend checks to shareholders. And, without organizations like ours, medically underserved patients would be thrown onto Medicaid and Medicare rolls, actually burdening American taxpayers.

Nor is the program out of control. The Department of Health and Human Services regularly audits grantees, ensuring that 340B savings benefit patients.

A Berkeley Research Group study cited in the op-ed points the finger at grantees for runaway program growth. The author of the op-ed, however, fails to mention that Gilead Sciences paid for the study to present results that bolster the drugmaker’s apparent goal, which is to dismantle 340B.

Research in the op-ed deploys a statistic about Wholesale Acquisition Cost drug prices to exaggerate the size of 340B. Wholesale Acquisition Cost prices, set by drug companies, have zero relevance to quantifying actual drug expenditures, let alone 340B drug prices.

Wholesale Acquisition Cost prices occur pre-rebate and prior to price negotiations between drugmakers and buyers — the pharmacy benefit managers, federal payers and commercial health insurers — in the prescription drug supply chain. These prices have as much relevance as sticker prices for new cars. Irrespective of insurance status, no patient pays retail drug prices. No private or public sector entity pays list prices either. Thus, it is misleading to claim grantees generate a 73 percent margin from 340B purchases.

Drugmakers voluntarily entered into an agreement that extends discount prices to 340B providers. Why?

Was it out of beneficence and concern for low-income patients that could never afford their overpriced products? Hardly. In return, drug companies gain access to the much larger — and more lucrative — prescription Medicaid and Medicare drug markets.

Ignore public discourse about contract pharmacy agreements. The number of such arrangements is meaningless since doctors do not prescribe more medicine because nonprofits and the patients they serve have more places to fill prescriptions. Yet, drug companies aim to restrict contract pharmacy agreements because fewer sites translate to reduced access points for prescriptions at 340B prices.

The real fight over contract pharmacies is between drug manufacturers and pharmacy benefit managers. As for-profit healthcare industry combatants fight over prescription payments and reimbursements, the only casualties are underinsured and uninsured patients. Grantees without in-house pharmacies are forced to fill prescriptions at pharmacy benefit manager-preferred pharmacies, stealing 340B savings that Congress intended for safety-net providers.

Remember: The 340B Drug Pricing Program costs the American taxpayer nothing. Program funding comes from drug company profits.

Grantees such as AHF just want to care for vulnerable Americans — without interference from drug companies and PBMs seeking 340B savings for themselves.

John Hassell serves as national director of advocacy at AIDS Healthcare Foundation.