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Senate Bill 355 Would Divert Patient Savings to For-Profit Businesses

To the Editor:

Our state legislature passed reforms to ensure safe school environments for the immunocompromised through good immunization policies. 

Recently Connecticut passed a law allowing patients to utilize assistance programs to lower their out-of-pocket expenses.

That is why it is alarming to see these same lawmakers consider legislation that would divert savings intended for patients into the pockets of for-profit businesses.

In 1992, Congress created the 340B Drug Discount program to stretch limited resources and help patients access life-saving health care. The program requires pharmaceutical manufacturers to provide medicines to qualifying 340B hospitals at drastically discounted prices. Hospitals qualify for 340B discounts by serving a percentage of low-income or uninsured patients.

And while this program has good intentions, unfortunately the hospitals have seen it as a piggy bank during the past thirty years, abusing and expanding the program to where it is currently unrecognizable. And some states are trying to exacerbate the program.

Connecticut’s SB 355 would make it even worse.

If enacted, the bill would force manufacturers to send 340B-discounted drugs to “contract pharmacies,” which are tightly linked to abuses of the 340B program and have no obligation to pass savings on to patients. Shouldn’t that be our goal when enacting any healthcare savings legislation, that the patients save money? Not in this case.

340B is now the second largest federal drug program behind only Medicare part D to the tune of $38 million in 2020.  In 2010, the program was expanded to allow hospitals to contract with an unlimited number of pharmacies to dispense 340B purchased medications to patients.  Since then, the amount of contract pharmacies has grown by 4,000%. Some hospitals in Connecticut do business through pharmacies in Texas and California. How is that benefitting Connecticut patients?

Even contracts at Connecticut’s own Hartford Healthcare and Yale New Haven Health have skyrocketed according to data from HRSA (Health Resources and Services Administration). In 2011, Yale had one contract pharmacy and in 2022 has 266.  In 2016, Hartford Health Care had 7 contracts and today has 148. 

These are profitable relationships. A report from Berkley Research Group showed that the average profit margin on 340B medicines commonly dispensed through contract pharmacies is an estimated 72 percent, compared with just 22 percent for non-340B medicines dispensed through independent pharmacies.

According to a report by the Community Oncologist Alliance (COA), some 340B hospitals charge patients, including the uninsured,  as much as 3.8 times the cost that they pay to acquire the medication.

These “nonprofit” 340B hospitals are lining their pockets at the expense of patients that need charity care; something they provide less of than the average hospital.

Legislation like SB 355 has been rejected in Vermont and Maine and is still being scrutinized in California.  Arkansas passed a variation of the bill, and it is now tied up in litigation. 

Though well intended to help better serve populations that needed better access to potentially lifesaving medications, 340B not only needs to be reformed, but states like Connecticut should stay out of potential legislative traps that could make an already corrupted program worse.

John LaMattina
Stonington, CT

LaMattina is former President, Pfizer Global Research and Development. He is the author of the upcoming book, “Profits and Pharma: Balancing Innovation, Medicine and Drug Prices.”

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