The 340B Drug Pricing Program was created to benefit low-income and uninsured Americans. Over time, it has morphed into a federal subsidy for hospitals in affluent areas at the expense of patients and drug manufacturers. Instead of delivering low-cost medicine to those most in need, the program enriches the hospitals least in need of help. Only Congress can realign the program with its purpose: helping Americans who cannot afford their medicine.
The origin of the 340B program is rooted in the Medicaid Best Price Rule of 1990, which inadvertently ended charitable drug donations. The rule required manufacturers to charge Medicare the lowest price offered to any buyer, including charitable donations. Faced with the prospect of supplying Medicare at no charge, manufacturers withdrew their charitable efforts. In response, Congress instituted the 340B program two years later to provide discounted medicines to safety-net hospitals.
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Justin Leventhal is a senior policy analyst for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org or follow us on X @ConsumerPal.