Gary L. Roth, DO, Chief Medical Officer, MHA
Recent headlines have taken aim at the 340B Program – a federal drug savings initiative that serves as a lifeline to important community healthcare services. As a long-time cardiothoracic surgeon, it’s time to set the record straight on 340B.
Here’s the reality: doctors, nurses and healthcare leaders share patient’s frustration over rising healthcare costs. Michigan hospitals and health systems employ 222,000 residents, while healthcare is the largest employer in the state. We experience rising healthcare costs and premiums in lockstep with other businesses; while seeing those costs in the faces of every patient who walks through our doors and how cost can influence a person’s decision to seek care.
But attacking the 340B program is the wrong answer to a real problem.
What 340B Actually Does
The 340B program allows eligible hospitals and safety-net healthcare providers – those serving disproportionately high numbers of low-income and uninsured patients – to purchase certain outpatient drugs at reduced prices. The savings are directly reinvested into patient care: keeping rural emergency departments open, funding behavioral health services, expanding pharmacy access in underserved communities and subsidizing care for patients who cannot pay.
Hospitals located in 340B-eligible communities are reimbursed at levels below the full cost to deliver care. This federal program was created to financially support community-based healthcare services without spending any taxpayer dollars.
In Michigan, where rural hospital closures remain a persistent threat and safety-net institutions serve our most vulnerable neighbors, 340B is a lifeline to keeping healthcare close to home. For myself, who spent my career caring for critical care patients in the Greater Lansing area, 340B is a key part of supporting the healthcare we can receive in our community. I know 340B works because of my lived experience providing care because of it. Without 340B savings, some Michigan hospitals would face an impossible choice: cut lifesaving services or close their doors.
Let’s examine what these recent headlines are doing – distracting attention from the reality that drug companies are significantly driving healthcare costs. Their solution is to blame the caregivers and their hospitals that care for everyone who walks through their doors, year-round.
Drug prices in the United States have risen at rates that far outpace inflation. The cost of drugs for hospitals grew 13.6% last year, while hospital prices only increased 3.3%.
Unlike hospitals, drug companies set their own prices with virtually no regulatory check. Unlike hospitals, drug companies boast nearly 23% annual increases in revenue while still raising drug costs. Unlike hospitals, they don’t have to be open at 3 a.m. when someone’s child is struggling to breathe. Hospitals are the ones staying through the night to treat emergency aneurysms, heart attacks and strokes. I know this because I’ve treated far more than I can count.
Hospitals are always there. Always caring. Always working to advance care, regardless of ability to pay, regardless of the hour, regardless of the complexity.
This tension between drug pricing and healthcare affordability was exactly the kind of issue raised at a recent Crain’s Detroit Business Healthcare Affordability Roundtable, where Michigan hospitals and business leaders gathered to confront the systemic forces driving costs higher. The consensus was clear: meaningful reform requires looking at the full picture, including the drug supply chain, and not taking a scalpel to programs that help hospitals keep their doors open around the clock to serve the patients who need them most.
Let’s Solve the Right Problem Together
Accountability and transparency matter and the MHA support both. What I know from meeting and caring for patients is that meaningful solutions are those that impact their pocketbook without touching their healthcare services. Dismantling 340B as drug companies and their partners wish to do fails to achieve either of those outcomes. It instead pads drug company profits while risks community healthcare services.
The MHA is ready to be at the table. We invite lawmakers, business leaders, insurers and drug companies to join us in pursuing real, collaborative solutions to the cost challenges facing Michigan families.
