CAGW Signs Coalition Letter Supporting Safety Net 340B Drug Program Reforms | Citizens Against Government Waste
The WasteWatcher: The Staff Blog of Citizens Against Government Waste

CAGW Signs Coalition Letter Supporting Safety Net 340B Drug Program Reforms

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact

On June 18, Citizens Against Government Waste (CAGW) became one of 58 diverse organizations that signed onto a letter congratulating Department of Health and Human Services Secretary Alex Azar for the actions his agency is taking to reform and return the Safety Net 340B Drug Program back to its original intent of helping uninsured, low-income people get access to affordable prescription drugs.  These proposals can be found in President Trump’s blueprint to lower drugs costs, “American Patients First.”

The drug discount program was created in 1992 and requires pharmaceutical manufacturers that participate in Medicaid to provide heavily discounted drugs to certain federally-funded clinics and non-profit hospitals that provide direct clinical care to large numbers of uninsured, low-income Americans.  But, like many government programs, the 340B drug program has grown exponentially, primarily because of the Patient Protection and Affordable Care Act (ACA), or Obamacare, and it is being exploited by many hospitals to pad their budgets.  For example, according to a January 2018 House Energy and Commerce Committee report, the number of hospitals participating in the 340B drug program has grown from 591 in 2005 to 2,479 as of October 2017.  The cost of the program is growing at double-digit rates, an average of 29 percent a year since 2014, hitting a record $19.3 billion in 2017, compared to $6.9 billion in 2012.  At the same time, charity care has dropped at hospitals, from $45.9 billion in 2012 to $38.3 billion in 2016.

CAGW has been concerned about the misuse of 340B drug program by hospitals since 2014 and has written extensively about it.  One only needs to type in 340B in our website’s search engine or peruse our media and legislative sections to find a series of blogs, op-eds, and letters to Congress concerning this safety-net drug program.  In 2016, our organization became a member of AIRx340B, the Alliance for Integrity and Reform of 340B.  The group's mission includes making sure the safty-net program directly supports access to prescription drugs for uninsured indigent patients. 

Legislation has been offered in Congress to reform the 340B program.  For example, H.R. 4710, the 340B PAUSE ACT, sponsored by Reps. Larry Bucshon (R-In.) and Scott Peters (D-Calif.) and S. 2312, the HELP ACT, sponsored by Sen. Bill Cassidy (R-La.) would help return the program back to its original mission of helping low-income patients without insurance.

Unfortunately, Rep. Doris Matsui (D-Calif.) seems determined to allow hospitals to continue to abuse the program.  Her legislation, H.R. 6701, the SERV Communities Act, would preserve the status-quo, allowing hospitals to pocket billions of dollars because of the “spread” or the difference between the 340B discounted price and what insurers pay, including Medicare, for their covered patients.

This abuse of the program is a direct result of no clear definition for a 340B patient.  CAGW believes legislation is needed to clarify that a 340B patient must have a low income and are uninsured to assure the Safety Net 340B Drug Program is used to help these patients and not fatten hospital coffers.


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