If the drug companies are successful, our hospital systems — UCLA Health in Los Angeles and UW Medicine in Seattle — together stand to lose more than $110 million in funds annually that we use to provide care to our patients who are most in need. And we are not alone in this struggle, as safety-net hospitals, community health centers, rural clinics, and other providers caring for underserved communities throughout the country could lose billions.
The crisis is caused by pharmaceutical industry attacks on what is known as the 340B drug pricing program. Congress created 340B to help hospitals serving large numbers of low-income patients to stretch scarce federal resources as far as possible to support essential services. The program requires drug manufacturers participating in Medicaid and Medicare to sell outpatient drugs to eligible safety-net providers at a discount. The 340B program represents a small sliver of all drug company sales in the U.S., but its discounts are an invaluable resource for nonprofit 340B providers. Importantly, because the drug companies provide the discounts, the 340B program’s savings do not use taxpayer money.
340B is working, and it is working well. According to the American Hospital Association, 340B hospitals provided $64.3 billion in benefits to the communities they served in 2017. In 2018, 340B hospitals provided 75 percent of hospital care to Medicaid patients while making up only 43 percent of all acute care hospitals. Overall, 340B hospitals provide 60 percent of all uncompensated and unreimbursed care in the U.S.
For UW Medicine, 340B discounts enable us to provide comprehensive inpatient and outpatient services at our hospitals and clinics to uninsured and underinsured patients, including Harborview Medical Center’s International Medicine Clinic, which serves the region’s refugee community, and Pioneer Square Clinic, which serves the city’s homeless population.
At UCLA Health, the program allows us to subsidize cancer treatments and immunotherapy for Medicaid and uninsured patients, expand access to specialized services at the Venice Family Clinic where 75 percent of patients live below the Federal poverty line and 16 percent are experiencing homelessness and partner with the U.S. Department of Veteran Affairs to provide in-kind medical and behavioral health services to veterans and their families.
But several pharmaceutical companies started endangering such 340B success stories throughout the nation earlier this year when they unilaterally stopped providing the 340B discounts for drugs dispensed through community-based pharmacies. 340B hospitals such as our partnership with these providers to serve our patients who fill their prescriptions at their local community or mail-order pharmacies. By refusing 340B pricing through these pharmacy partnerships, these drug companies ignore the program’s requirements while effectively increasing their drug prices by as much as 5,000 times in some extreme cases.
These drug company actions are not only unlawful but also unconscionable. They come at a time when safety-net providers struggle to provide care to communities that have been hit the hardest by COVID-19 and while drug manufacturers continue to make enormous profits. Although the Department of Health and Human Services has expressed strong concerns with this manufacturer’s behavior, it has not yet acted under its authority to require the companies to restore the mandated discounts.
We call on HHS Secretary Alex Azar to protect patients by protecting the 340B drug pricing program. Without intervention, the results will be devastating to the communities served by UW Medicine, UCLA Health, and thousands of other safety-net providers who rely on the 340B drug pricing program. In the middle of a pandemic with millions out of work and losing health insurance, hospitals such as ours need these resources more than ever so we can fulfill our missions to the patients most in need.