Rural Hospitals Endangered By Efforts From Big Pharma


If you don’t work in the health care industry, you more than likely don’t know about the 340B program. But the population served by your rural or inner city hospital depends on it.

Over 25 years ago, a deal was made between the pharmaceutical drug companies and the federal government. Pharma was granted access to a guaranteed market for their drugs through Medicaid in exchange for agreeing to provide cheaper medications to hospitals serving less fortunate demographics, mainly rural and inner city hospitals where a disproportionately high percentage of low-income patients are treated.

The American Hospital Association has reported, “For nearly 25 years, the 340B program has provided financial relief from high prescription drug costs to certain health care providers that care for low-income and indigent populations. Hospitals use the 340B savings to provide clinical pharmacy services, financial assistance to patients unable to afford their prescriptions, oncology services and community outreach programs, among others.”

This agreement has been beneficial both sides. But as Medicaid enrollment advanced under Obamacare, while the range of drugs that are covered under the grown has also expanded, an angry lobbying effort is currently underway to change the 340B program. Pharma is probably the most powerful lobbying force in Washington.

In the first three month of this year alone, The New York Times reported that the pharmaceutical and health products industry spent $78 million on lobbying.

Last year, in the U.S. and Canada, pharmaceutical revenues were $515 billion.

Politico has reported, Pharma has been mainly unharmed by Obamacare:

“Insurers have to cover sick people, no matter how costly their illness. Hospitals must meet new benchmarks for things like readmissions or face penalties. Doctors are caught up in a rapid industry consolidation and must adapt to new payment models, changing traditional practice. The pharmaceutical industry, on the other hand, hasn’t much changed — except its prices are higher and there’s nothing in the health law that allows the government to push back.”
Currently Pharma is using President Trump’s Working Group on Drug Prices to tighten the scope of the 340B program that would hinder rural and inner city hospitals nationwide.

Jazz Shaw of Hot Air described Pharma’s effort this way:

“If Big Pharma wants to give up all the entitlement dollars they’re getting from this gift horse, then fine… let’s take a look at dropping or scaling back 340B. … But until then, dropping the program benefits nobody but the pharmaceutical industry, not those intended to get easier access to lifesaving drugs from it.”

Pharma is attempting to grow the scope of the so-called Orphan Drug Program, which was innovated in the 1980s to provide incentives to “niche” pharmaceuticals. At first, this program was well intentioned, but like many government programs, it has now become a victim to companion capitalism.

According to Kaiser Health News, “KHN’s investigation found that about a third of orphan approvals by the FDA since the program began have been either for repurposed mass market drugs or drugs that received multiple orphan approvals.”

Luckily, there has been bipartisan support to halt this harmful lobbying effort from Pharma.

Energy and Commerce Committee members like Reps. John Carter (R-TX) and Michael Burgess (R-TX) have an important opportunity to crucially endorse this legislation.

Additionally, as Fortune Magazine reported, the General Accounting Office (GAO) is actively investigating that pharmaceutical industry for abuse of the Orphan Drug Act that “gives firms access to beefed-up patent and market exclusivity rights and imposes less stringent clinical trial requirements for treatments with an FDA orphan drug designation.”

Everyone understands the need for private sector companies to make money. Though Pharma has been benefitting from the Orphan Drug Act and the 340B program for years now.

If successful, this lobbying effort would hike up costs, discourage creativity and most importantly deprive poorer patients of access to lifesaving and life-enhancing medicines. Any effort to hurt rural and inner city hospitals, and by extension their patients, would not be smart and more than likely would hinder tens of thousands of Americans.


Please enter your comment!
Please enter your name here