On this episode of the podcast, Terry and Bob discuss the flawed 340B prescription drug program, which hospitals take advantage of to profit off patients and taxpayers. They highlight how the program drives up healthcare costs, which reduce healthcare accessibility. 

The 340B program is a government initiative initially intended to help low-income patients afford prescription drugs. It offers hospitals heavily subsidized medications with the intention that hospitals pass along these savings to patients in the form of low-cost drugs. In reality, however, hospitals often use this program as an arbitrage opportunity, charging patients full-price and pocketing the difference. The 340B program has become a major revenue stream for patients. 

Dr. Bill Smith, a current visiting fellow at the Pioneer Institute, joins the show to dissect what is at stake for low-income patients and their ability to afford prescription drugs. He explains how he supports the idea behind the 340B program and that it is good in theory yet has been taken advantage of by hospitals. 

Dr. Smith champions commonsense reforms that require 340B discounts to be targeted to low-income patients whom it intends to help. He advocates for guardrails to ensure that the money goes to the patients who need it most. Bob notes how the program has generated $38 billion per year for hospitals in funds that should go to patients. It has become a hospital cash cow, not a much-needed aid for low-income patients. 

Terry highlights how 340B has also helped pharmacies that contract with hospitals to profit from these discounted drugs. For-profit pharmacy chains make a lot of money off this program and displace community oncology centers. For instance, these pharmacies buy a $100,000 chemotherapy drug for $25,000 and then charge patients’ insurance the full list price, driving up the cost of care. They highlight another potential reform: transparency — publicizing the spreads between what hospitals pay for these 340B drugs and how much they make from administering them. 

Kate interviews Alyse, who shares her story of having a rare calcium deficiency. She explains her bad experience with unnecessary surgery. She highlights how she found out about her condition, which causes major exhaustion and weakness and forced her to go on disability. She discusses the costs and financial burden of vitamins. People don’t talk about the cost of over-the-counter medications, but this topic should be included in the broader healthcare affordability discussion. 

Listen to Episode 9: How Hospitals Get Rich Off Your Prescriptions