The Pharmaceutical Research and Manufacturers of America (PhRMA) said some private equity-backed health care companies are restructuring as nonprofits to qualify for benefits under the federal 340B drug pricing program, which is intended to support safety-net health care providers and vulnerable patients.
In a blog post, the organization cited U.S. Digestive Health as an example and said the practice raises concerns about whether the program is being used as intended and highlights the need for greater accountability and oversight.
The 340B program requires drug manufacturers that participate in Medicaid to sell certain outpatient medicines at or below a federal ceiling price to eligible covered entities. According to the Electronic Code of Federal Regulations, those entities include certain public and nonprofit hospitals, federally qualified health centers, specialized clinics and other safety-net providers.
PhRMA's concerns center on whether organizations are using nonprofit status to gain access to discounted medicines and related revenue without advancing the program's intended patient-focused mission.
The 340B program has expanded significantly in recent years. According to the U.S. Government Accountability Office, the number of contract pharmacies participating in the program grew from about 1,300 in 2010 to nearly 20,000 in 2017. The expansion increased the number of locations dispensing discounted drugs while also creating additional oversight and compliance challenges related to patient eligibility and program administration.
PhRMA advocates for public policies that support the discovery of new medicines by biopharmaceutical research companies and centers its work on patient access, medical innovation and the development of treatments and cures. Its position on the 340B program fits within a broader policy focus on drug pricing systems, middlemen, transparency and whether savings reach patients.
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