Consumer Choice Center Managing Director: “Hospitals…just pocket the massive margin” from 340b drug discount program

Fred Roeder, managing director of the Consumer Choice Center, said the federal 340B drug pricing program allows hospitals to benefit from discounted drugs without passing savings on to patients.

“In the early nineties, there was…a drug pricing program created…340B, which allows hospitals…to purchase medicines…at massive discounts,” Roeder said during an appearance on the Health Policy Podcast.

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Roeder said the program was designed to support hospitals serving low-income and vulnerable populations, but lacks requirements ensuring those savings reach patients.

“The problem is actually the hospitals are not required to pass on these savings to the patients,” Roeder said. “So at the end of the day, these patients…pay the same sticker price as you would pay out on Beverly Hills in a hospital.”

He said hospitals, many of which operate as nonprofit organizations, are able to retain the difference between discounted acquisition costs and full prices charged to patients and insurers.

“The hospitals…just pocket the massive margin,” Roeder said, adding the structure creates “a windfall for the hospitals” without accountability.

The 340B program was established in 1992 to allow eligible healthcare providers to purchase outpatient drugs at reduced prices, with the intent of expanding access for vulnerable populations.

Roeder is a health economist and founder of the Consumer Choice Center, a global advocacy group focused on promoting consumer choice, innovation, and market-based policy solutions across healthcare and other sectors.