Mike Flynn at Breitbart picked up a little noticed tidbit on the health care front this weekend which probably deserves a bit more attention. It deals with a rather obscure federal plan known as 340B Drug Pricing Program. Established during the Clinton administration, it requires pharmaceutical companies to make certain critical prescription drugs available at affordable prices in primarily rural, low income areas, most frequently in agriculturally focused regions of the country. This is a requirement the suppliers must meet in order to remain eligible for reimbursements through entitlement programs such as Medicaid.
As Mike explains, this bit of largesse actually represents only a tiny drop in the bucket compared to the total revenue of the pharmaceutical industry.
Drug companies were “encouraged,” as the government would no doubt phrase it, to participate in the program by winning access to other government programs in exchange.
Just over 2,000 hospitals, many in rural areas, participate in the program, but the overall impact of the discounts on big PhRMA are modest. The entire program purchases only around $7 billion worth of discounted drugs a year, around 2 percent of the pharmaceutical industry’s revenues.
As we head into the next election cycle, the pharmaceutical companies have banded together to begin lobbying to downgrade or remove this federal requirement, no doubt hoping to charge full price for all medications even in these more remote areas with lower incomes and limited access to healthcare. They’re doing it through a new group called the Alliance for Integrity and Reform 340B. (You always have to work the word “integrity” in the name of such things.)
“The 340B program has grown tremendously in the past ten years, and it’s concerning to see projections that continue this unsustainable trajectory,” said Stephanie Silverman, spokesperson for AIR 340B, a coalition of patient, clinical and manufacturing interests. “ Some entities use the program responsibly; however, 340B already lacks sufficient oversight for generating profits for well-funded hospitals that don’t primarily serve the uninsured as the program intended. Now is the time to establish needed oversight for the program.”
What’s really interesting in the pitch being made by this “coalition” is the fact that they cite the success of Obamacare as the reason for proposing “needed oversight” of the program. (The phrase needed oversight doesn’t need a lot of translation to see that it means scaling back or curtailing entirely.) The pharmaceutical companies were some of the biggest pitchmen for Obamacare and have profited the most handsomely from it. And now they’re claiming that since so many more people have health insurance there’s clearly not as much need for a bunch of grubby farmers to get a discount on drugs when they fall ill since they can just charge the bill to their insurance anyway.
I’m not generally a huge fan of government entitlement programs to begin with, but this is some pretty cynical maneuvering if you ask me. We’re talking about a tiny slice of the total medical reimbursements going on around the country and they’re going to people who are largely left behind if and when the jobs picture improves in the industrial sector. We certainly have bigger fish to fry on the Obamacare front than this, so perhaps it’s best to leave the 340B program as is for the time being.