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Drug pricing program strengthens health care

Brian Floyd

Brian Floyd


Sunday, July 15, 2018

Vidant Health, like hospital systems around the nation, serves a critical role as a health care safety net, providing high-quality care to all patients, including those who are under or uninsured. 

According to the 2015 Small Area Income and Poverty Estimates, 28 of the 29 counties in the Vidant service area were estimated to have a poverty rate above 10 percent, with 14 counties above the 20 percent level.

We provide vital services in the community, from trauma centers to clinics, outpatient treatment programs, local chemotherapy options and other services, all available to patients regardless of their ability to pay.

For 25 years, a highly effective, little-known program created by Congress — the 340B Drug Pricing Program — has allowed safety-net hospitals like Vidant’s as well as our doctors and other providers to enhance and strengthen the care we provide to our communities and vulnerable patients, all at no cost to taxpayers.

This is because, under the 340B program, qualifying hospitals, clinics and other providers that treat a significant share of vulnerable patients can purchase outpatient drugs at a discount from drug manufacturers.

In the last fiscal year, Vidant provided $219.5 million in community benefit; $209 million of the total was provided by our 340B hospitals. Factors making up the majority of the $209 million in community benefit that our 340B hospital provide, include: 1) $68 million: estimated unreimbursed costs associated with treating Medicare patients, 2) $38 million: estimated unreimbursed costs associated with treating Medicaid patients, and 3) $48.5 million: estimated costs of treating charity care patients.

The 340B program is a relatively small one — representing less than 3 percent of the total $457 billion in total U.S. drug sales — but the benefits to safety-net hospitals and our patients are monumental. This valuable investment pays off in healthier people in eastern North Carolina and across the nation.

And even with providing the 340B discounts, drug companies are still achieving profit margins higher than most other industries. A recent U.S. Government Accountability Office report shows that annual profit margins of the largest 25 pharmaceutical companies have increased between 15-20 percent since 2006.

Unfortunately, the success of the 340B program is being undermined. A government regulation that went into effect on Jan. 1 drastically cuts Medicare payments to safety-net hospitals by $1.6 billion annually for their 340B drugs. These reductions are straining our ability to maintain the services we are providing to our patients and community.

Thankfully, Reps. David McKinley (R-W.Va.) and Mike Thompson (D-Calif.) along with nearly 190 of their Congressional colleagues, understand the importance of the 340B program and have introduced a bipartisan bill that would rescind these devastating cuts. Congress needs to pass this legislation now.

The facts are clear — the 340B program provides big benefits without big government. Undermining 340B would not save taxpayers money and could mean patients and families in eastern North Carolina might not have access to care they need. We must protect 340B – it’s a bargain for the country and lifeline for hospitals and their communities.

Brian Floyd is president of Vidant Medical Center and Chief Operating Officer of Vidant Health Hospitals.


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