House Speaker Nancy Pelosi (D-CA) was absolutely correct when she said “we have to pass the bill so that you can find out what is in it.” We now know that tucked inside the legislation was a provision designed to increase the size and scope of the 340B Drug Pricing Program, a government program originally designed to provide discounted drugs to the poor. But instead of assisting the indigent, the expansion allowed corporations like Walgreens and CVS to make millions by playing a shell game with the government. It’s cronyism at its worst.
These companies and others are receiving the drugs at the discounted rate but then billing Medicare, Medicaid, and even private insurance companies for the full market rate. The difference adds up to millions of dollars which are then banked into their corporate coffers.
The program is so profitable to these companies that 2% of all pharmaceutical drugs sold in the United States are now sold through the program. Like any government giveaways, an army of lobbyists have been enlisted to keep and even expand the program. The so-called 340B Coalition, whose members include Wal-Mart, Walgreens, and others, is working to inflate the program. The bigger it gets, the more money they make.
Recently the Inspector General of the Department of Health and Human Services issued a report noting that there has been a 1,245% increase in pharmacies using this program, and most are taking “duplicate discounts.” The Charlotte Observer reported last year that Duke University Hospital purchased $66 million worth of drugs through the discount program, saving $48 million. It then sold the drugs to patients for $136 million, making a profit of $70 million.
It is hard to argue with a straight face that the poor and indigent, the folks the program was designed to assist, are benefiting. An honest assessment would conclude the program has been hijacked and is benefiting large corporations, costing taxpayers and health insurance policy holders hundreds of millions a year. Rather than extend the program, the time has come for Congress to swallow the pill and pull the plug.