Most government support programs directly benefit people, whether it is SNAP (Supplemental Nutrition Assistance Program), TANF (Temporary Assistance for Needy Families), or housing voucher benefits. But when it comes to health, our state provides health aid by paying money to institutions, not to patients. Shouldn’t the funds follow the patient, not the system?

One example of this unique approach is the rebates given to hospitals, not patients, under the 340B drug rebate program. The program, which requires manufacturers to provide rebates on most drugs administered in outpatient settings to assist safety-net providers, is under intense scrutiny in Congress.

All kinds of negative incentives arise because the healthcare system prioritizes intermediaries over patients. recently piece In our article published in the Journal of the American Medical Association, we argue that reforming the 340B program is a crucial step in changing American health care to prioritize financing of patients rather than institutions. Our research resonates testimony One of us recently gave it to US lawmakers on the House Energy and Commerce Committee.

Under 340B, hospitals or contracted pharmacies can purchase drugs at significant discounts. Insurers then reimburse these hospitals at full price, creating a large source of revenue through the spread. The legislative intent is that these revenues will expand the capacity of institutions that serve a disproportionate number of at-risk patients.

The fact that there are no obligations on how hospitals spend these revenues leaves the program open to abuse. Unsurprisingly, 340B funds rarely serve their intended purposes. The program is inefficient, open to manipulation, and creates disincentives that lead to many negative consequences.

to start due to lax oversightA niche program expected to help a small number of institutions serving vulnerable patients has grown second largest government drug discount program. Because serving insured patients provides an income reward, a program aimed at serving the poor encourages hospitals to treat the wealthy. Various strategies enable this undesirable outcome to occur.

340B hospitals actively manage their operations to ensure they meet low-income service criteria without exceeding them. Them expand They will place satellite facilities in affluent and well-insured neighborhoods to increase 340B revenues. Of course, the targeted population does not live in affluent, well-insured areas. The rebate program also provides another reason for large hospital systems to acquire independent practices. Doing so turns more drugs into higher-margin 340B prescriptions.

Perhaps worst of all for patients, these games inflate drug prices. useThey benefit from the lower prices of 340B and, as a result, pay higher out-of-pocket expenses for these drugs.

Hospitals argue they need the funds provided by the 340B vote to maintain normal clinical operations. However, most of the increase in operational costs is due to their growth. administrative bloatit’s been a while Outpacing growth in clinical care. These tax-exempt institutions already receive numerous subsidies. If they need someone else, they should present that argument to legislators by opening their books and proving that the funds are not just going to executive salaries or other frivolous expenses (e.g. a company a 340B entity recently acquired). movie studio). Do not allow these institutions to benefit from a drug assistance program intended to benefit patients.

Providing direct funding to patients would help reduce these problems. Giving patients a discount allows them to choose the provider that best meets their needs. This eliminates the opportunity for hospital companies to game the system. Patients empowered by this discount will have institutions competing to provide services that suit their needs. Rather than serving wealthy patients, these institutions will focus on providing services such as social services and transportation assistance to poor individuals.