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Opinion: Drug makers charge hospitals less for some medicines. Consumers aren’t getting the savings

Colorado’s congressional delegation needs to investigate why lower prices aren’t being passed on to patients

For a real New Year’s resolution, we are calling on Colorado’s U.S. Sens. Michael Bennet and John Hickenlooper to help us account for billions spent on a healthcare program that leaves struggling families holding the tab.

Jennifer Churchfield

The Federal 340B program is becoming the poster child for federal programs run amok, allowing billions designated for affordable prescriptions to be lost within the system and leaving underserved families without the discounts they need. Ultimately, the 340B program is failing to deliver on its promise of affordable prescription medicines.

A study recently released by a non-partisan healthcare think tank conducted a comprehensive evaluation of this Federal 340B program and concluded it is failing patients. The 340B Drug Pricing Program calls for drug companies to provide hospitals and other providers deep discounts on certain prescription medicines. The savings from the discounts should benefit patients in the form of lower prices at the drug counter.  

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Instead, lower income, marginalized community members, and under-served patients are seeing little benefits, raising major questions about where the nearly $30 billion in savings are going.

The national study, conducted by the Pacific Research Institute, found that while 340B hospitals are more profitable than traditional hospitals, they do not provide more charitable care. Data collected from four Colorado hospitals—Valley View Hospital in Glenwood Springs; Yampa Valley Medical Center in Steamboat; St. Joseph Hospital in Denver; and Parkview Medical Centerin Pueblo —as part of a sample of 25 nationwide largely mirrored the national pattern.

The report evaluated each hospital’s net income relative to net revenue. The profitability for 340B hospitals is 37 percent greater than the average of all hospitals. The report also showed 340B hospitals provided less charity care: 1.66 percent of net patient revenues, compared to 2.03 among hospitals in the Centers for Medicare and Medicaid Services database.

The growth of profits was even more dramatic: profits at 340B hospitals grew 9.1% annually over this period compared to profitability growth of 2.5% annually at non-340B hospitals and nursing care facilities.

340B hospitals also maintained more contract pharmacies than did the average hospital. So what? The Pacific Research Institute report found that pharmacies operating under a contract with a hospital were less likely to pass 340B cost savings to patients.

Discounted 340B purchases were at least $29.9 billion in 2019, according to Drug Channels, a pharmaceutical economics newsletter. That figure is 23% higher than just a year earlier. That is  explosive growth, making the 340B program now almost as large as the Medicaid program’s outpatient drug sales.

340B lacks Medicaid’s regulatory infrastructure and controls. For example, Medicaid rebates go to the government and then the government passes those savings onto the Medicaid patient in lower out-of-pocket costs. The Medicaid rebates can be tracked.

It appears all but certain that the millions of dollars of 340B discounts that should be off-setting prescription costs for vulnerable patients actually are getting lost within our massive healthcare system.

The Colorado Health Advocacy Information Network supports common-sense and market-based solutions to improve America’s health care system. We are asking Colorado’s congressional delegation, especially Sens. Bennet and Hickenlooper, to lead the call for a 340B program audit by the Congressional Budget Office. There’s a reason the U.S. The Supreme Court is currently being asked to weigh in on this complex issue and decide if 340B hospitals are taking advantage of reimbursements.

The 340B program started with a simple intent: to help vulnerable patients with chronic conditions. In 2022 we ask Colorado’s Senators to resolve to fix 340B. It’s well past time to bring the program back to that original purpose.


Jennifer Churchfield, of Englewood, is co-chair of Front Range PharmaLogic, working with business organizations to provide fact-based information regarding policies that support the Bioscience industry in Colorado. She is chair of the Colorado Health Advocacy Information Network, a not-for-profit statewide organization focused on getting politics out of healthcare. 


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