The U.S. health care system is facing a prescription drug spending crisis fueled by staggering increases in recent years in the price of drugs. The burden of these rising prices is falling on patients and their families, and to providers of care, including America’s hospitals and health systems. The AHA and our members on the front lines of care recognize the value of innovative, life-saving medications as much as anyone, but a drug priced beyond a patient’s reach will not save anyone’s life.


That is why we were initially encouraged that the White House Council of Economic Advisers identified the high and rising cost of drugs as a priority area of reform through the release of a white paper earlier this month. Several of the recommendations, such as incentivizing manufacturers to bring more generic drugs to market more quickly, can help move the needle. However, on the whole, the report misses the mark by ignoring the significant role of drug manufacturers in setting the initial prices for drugs and by advancing ideas that would largely benefit the drug industry, not patients. In particular, proposals related to the 340B drug saving program would not only fail to reduce drug prices, but would also reduce the ability of hospitals to support programs that enhance patient services and access to care in vulnerable communities.  


The authors of the report clearly do not understand the basics of the 340B program. For example, they make several references to the program being a source of profit to hospital “shareholders.” However, only hospitals that are either public or nonprofit are eligible for participation in the program and therefore have no shareholders. Hospitals instead use savings as intended – to expand access to care.


The Council also appears confused on this point, asserting that “340B is a program to provide outpatient drugs.” Congress itself expressed that the intent of the program is “to enable [covered entities] to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” 340B hospitals do provide reduced-cost drug therapies, but there are many other programs and services they support with savings from the 340B program based on the unique needs of their communities.

The reality is that for 25 years, the 340B drug savings program, at no cost to the government, has enabled eligible hospitals to purchase certain outpatient drugs from pharmaceutical manufacturers at discounted prices. The savings are what allow hospitals to provide additional benefits to their communities. Without such savings, 340B hospitals could not, like they do today, increase access to a more comprehensive set of services in their communities, provide reduced cost pharmacy services to low-income patients, fund community outreach programs, provide free vaccines or expand access to oncology services for cancer patients.


In addition to those misinformed and misguided proposals on 340B, the report also blames the high cost of drugs on onerous regulations, government programs that help patients afford their medications, bad actors in the health field, and price setting in other countries, to name a few examples. While some of these factors may contribute to the cost of drugs, the report fails to focus on the real culprit when it comes to the high cost of drugs – drug companies. 


Instead of targeting the 340B program, which would only benefit drug companies while creating negative consequences for the patients and communities who rely on this vital program, the Administration and Congress should focus on policy proposals that will actually make a real difference in lowering the cost of drugs. These policies should focus on the entities that set the list prices of drugs – drug companies – and not those on the front lines of providing patient care each day.

The AHA has worked with our members to develop policy solutions to halt the rising costs of drugs without jeopardizing access to care. As the Council acknowledged, increased competition is key. We need to do more to incentivize drug manufacturers to bring generic entrants to market, and we need to stop bad behavior on the part of manufacturers that extends market exclusivity periods for certain drug therapies indefinitely, such as “evergreening” or even the recent example of transferring patents to an Native American tribe to protect its patent behind the tribe’s sovereign immunity. These solutions and more, which America’s hospitals and health systems are committed to working with lawmakers, the Administration, and others in the health field to enact, can be found HERE.


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