The Scoop on Double Dipping Drug Deals

Health Resources & Services Administration (HRSA)

Senator Chuck Grassley, R-IA, has been exposing these 340B loopholes, just more Federal waste in healthcare programs. The hospital lobby, the consumer lobby, the pharmacy lobby, the insurance lobby all profit or benefit from the overreach of 340B. Only Pharma, drug makers, are harmed here. Moreover, PhRMA, a lobbisyist group, the Pharmaceutical Research and Manufacturers of America, is gun shy about defending that charge because raising this up turns it into a, tirade of "Yeah, but your prices are high so it's justified."—and actually, that is the truth too!

So, as long as manufacturers are free to raise their prices whenever they wish to do so, they are largely immune to the cost implications of broader use of the 340B process; they just offset by ratcheting up the costs—too bad that patients and taxpayers cannot get a pricing immunization because they really pay for it all in the end—again!

Double-Dip Ice Cream Cone

340B Drug Pricing Regulations Program 

Purpose: “To stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services”—this is a direct quote on the HRSA Website home page. 

Why is this program important to the U.S. Healthcare Systems?—because all groups are named in the eligible marketplace lists as the covered entities:

Primary End-Users, Service Providers & Health Groups and Hospitals & Healthcare Facilities Organizations & Services. 

For instance, about 90% of 340B patients have insurance from Medicare, Medicaid, or a commercial payer. Hospitals earn large profits from the already-insured prescriptions to “Double–Bill” patients. Duke University Health System’s gross profits from this 340B program were almost $300 million over the past 5 years. Duke’s 2012 pharmacy gross margin was 51% or an additional $48.3 million=($69.7-$21.4).

The 340B Drug Pricing Program requires drug manufacturers to provide outpatient drugs to eligible health care organizations/covered entities at significantly reduced prices such defined in statute which includes:

HRSA-supported health centers and look-alikes, Ryan White clinics and State AIDS Drug Assistance programs, Medicare/Medicaid Disproportionate Share Hospitals, children’s hospitals, and other safety net providers.

Does the 340B Drug Pricing Program with "Double-Billing" Federal & Private Commercial Insurance involve any other groups in the health industry?—This is all perfectly legal under the current 340B regulations, which even permit broad retail community pharmacy networks to service these patients.

Did you know, for example, that more than 4,000 Walgreens retail pharmacies act as 340B contract pharmacies?—Read your Walgreens' prescription receipt, look at the "suggested retail price", the "Insurance Discount" deducted and then the "Patient" price due.

Factoid: In 2012, Walgreens did $45.9 Billion in prescription sales. U.S. industrywide did $182.2 Billion; which means pharmaceuticals sales attracts all types of competitors.

The outcome that seems to be in the future is those contracted pharmacies who have no particular healthcare mission except profit will be the death of the 340B program. With little very limited ability to monitor billing practices and the potential to game the 340B system, optimistically the drug makers, Big Pharma, have finally realized its their untenable losses of massive proportions that will doom the program. Let's put that wasted rebate money back into research for the new DNA target drugs instead of lining the pockets of profiteers.