Health Policy Advocate: 340b program expanding, doesn't require hospitals 'to providing anything' to patients

Peter Mihalick, a health policy and advocacy director and former Capitol Hill staffer, said the federal 340B drug pricing program has expanded significantly over time, raising concerns about whether it is benefiting patients as intended.

“The real issue is though, is that none of the directives from Congress in establishing the program force the hospitals… to actually provide anything for those particular patients,” Mihalick said on the Health Policy Podcast.

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The 340B program requires pharmaceutical manufacturers to provide outpatient drugs at steep discounts to eligible hospitals and clinics, which are then allowed to use the savings to fund services. Mihalick said the structure has led to mixed outcomes, with some facilities reinvesting in patient care while others use the funds for broader operational expenses.

“So… there are facilities and clinics that are doing the right thing… but also are funding capital improvement programs or building a new parking lot… or acquiring other offices,” Mihalick said.

He added that patients often do not directly benefit from the discounted pricing. Many are still required to pay full copays, which can lead to reduced medication adherence.

“They’re still required to pay those copays… even at a 340B hospital or a clinic,” Mihalick said. “You have folks that end up taking their drugs… every other day… and that’s just not… what Congress really wants.”

Mihalick also pointed to a lack of transparency in how savings flow through the system, particularly when hospitals rely on contract pharmacies.

“It kind of gets lost into this… untransparent drug and money network… like a shell game… who gets the discounts, where do the rebates come from,” he said.

While some reforms tied to the Inflation Reduction Act and regulatory efforts by the Centers for Medicare and Medicaid Services aim to increase transparency, Mihalick said they do not address core structural issues.

“That doesn’t address the underlying problems of loose definitions in the statute and kind of the ability to game the system a little bit,” he said.

Mihalick said a potential path forward could involve requiring that savings be directed toward patient care or reducing out-of-pocket costs, though political challenges remain.

“Somebody should be receiving that benefit… but unfortunately right now it’s not the patient that is walking through the door,” he said.

Mihalick previously worked on health policy issues on Capitol Hill and with the National Community Pharmacists Association, where he focused on drug pricing and patient access concerns. He now serves as health policy and advocacy director for the International Hearing Society and continues to follow developments in the 340B program.