South Dakota Patients Deserve Better: Reform The 340B Program
By Dr Bill Cohen
The 340B Drug Program was intended to help vulnerable or uninsured patients access life-saving medications while allowing hospitals serving low-income communities to purchase drugs at discounted rates. Unfortunately, many South Dakota hospitals are allegedly keeping the difference for their own financial benefit. I believe it’s time for lawmakers to reassess 340B and implement the necessary reformsto clean up this program.
Since 2010, the 340B program has expanded by 500%, with over 25,000 contract pharmacies now involved. You would think that growth would mean this program would be reaching more of its target populations. However, only 35% of 340B hospitals are in medically underserved areas.
Disproportionate Share Hospitals (DSH), which make up the majority of 340B participants, provide a clear example of the program’s failure. Just in South Dakota, DSHs earn more from 340B profits than they spend on charity care. In 2022, Avera McKennan, a major hospital, allocated just 0.3% of its operating costs to charity care. Meanwhile, nationally, DSH hospitals earned $44 billion in 340B profits in 2022, but only 42% was used for charity care. This begs the question: where are they directing the other 58%? Investigations show they are largely being directed toward other operational costs instead of being passed down to patients.
The lack of transparency in the 340B program has allowed hospitals and large corporations to take advantage of the system. Hospitals in South Dakota are profiting from discounted medications intended for low-income patients. Companies like Walgreens, CVS, and Walmart have increased their participation in 340B and profited significantly while patients see little benefit. In 2021 alone, CVS, Walgreens, Walmart, Cigna’s Express Scripts, and UnitedHealth’s OptumRx profited a combined $3.2 billion from 340B sales.
This unchecked profiteering harms patients, taxpayers, and state budgets. The solution is simple: we need transparency and accountability in South Dakota. A potential solution is shifting to a rebate-based model, where hospitals would only receive drug discounts through rebates once it is confirmed patients received the lower costs drugs. With nearly 75% of 340B audits between 2012 and 2019 revealing noncompliance, it’s clear too much trust has been placed in this program’s discount distributors.
In the interest of cleaning up our federal government, it’s important that some sunlight is put on its programs. 340B reform would be a strong priority for this new Congress. With Senator John Thune taking the helm of the US Senate and with Elon Musk and Vivek Ramaswamy leading the Department of Government Efficiency, there’s hope to bring much needed attention and yes – shed light on ways to better care for our patients. I encourage the soon-to-be Majority Leader to add this to the docket. South Dakota patients, particularly ones in underserved communities that already face significant health challenges, are counting on our policymakers to fix the program so it helps them access the lifechanging medicines they need.
Dr. Bill Cohen is a board-certified pain relief specialist and founder of American Pain Relief Institute.