Broken Federal Program Raises Healthcare Costs. Illinois Patients Deserve Transparency.
A cancer diagnosis can force patients to choose between paying for treatment and affording necessities like housing and groceries. Unfortunately, these challenges are exacerbated for underserved patients and communities of color. While many Illinois patients need financial relief, some healthcare entities are exploiting a little-known federal program, that was intended to help these patients, in pursuit of greater profit. At the same time, Illinois lawmakers are advancing legislation (SB 2385/HB 3350) that would expand the program and create further opportunities for health system middlemen to generate profits at the expense of vulnerable patients.
The 340B Drug Pricing Program was established by Congress to help vulnerable populations access medications. Created with good intentions, the program enables hospitals and clinics that serve a large number of uninsured or vulnerable patients to acquire deeply discounted treatments from drug manufacturers. In turn, 340B “entities” are expected to use the savings from these discounts to provide affordable care to these communities.
“A lack of program transparency has enabled many 340B covered entities to mark up the discounted cost of medicines instead of helping patients better access care.”
However, the program has gone severely off track, benefiting large hospital systems, for-profit, chain pharmacies, and health system middlemen that use 340B discounts to boost profits. A lack of program transparency has enabled many 340B covered entities to mark up the discounted cost of medicines instead of helping patients better access care. Research has shown medicine price markups are nearly seven times higher at 340B hospitals than at independent clinics. Nearly 70% of Illinois hospitals provide levels of charity care below the national average. Since 2015, almost 70% of audits conducted on Illinois 340B entities included adverse findings, such as illegal distribution of 340B-discounted drugs.
Discounted medication purchases under 340B reached over $66 billion in 2023. Despite the massive size of the program, there is no transparency into how savings from 340B drug discounts are used. This has enabled for-profit pharmacy chains and pharmacy benefit managers (PBMs) to siphon off billions in profit – rather than increasing access for vulnerable Illinoisians.
“Since 2015, almost 70% of audits conducted on Illinois 340B entities included adverse findings, such as illegal distribution of 340B-discounted drugs.”
Through relationships with pharmacies contracting with 340B covered entities, PBMs can generate significant revenue as they rake in the “spread” – the difference between the discounted 340B purchase price and the full cost of the medicine charged to patients or their insurers. Moreover, as the number of contract pharmacies has ballooned in recent years, the proportion of pharmacies in socioeconomically disadvantaged areas has decreased. Some covered entities that gained 340B status because of the populations they serve have turned away from the very communities they were meant to support.
Any expansion of the 340B program without transparency measures to ensure savings are not being used to pad the bottom lines of health system middlemen runs in direct opposition to efforts, including those championed by Governor JB Pritzker, to address how profiteering practices negatively impact patients and independent pharmacies in Illinois.
“Some covered entities that gained 340B status because of the populations they serve have turned away from the very communities they were meant to support.”
The ability for hospitals to profit deeply from 340B medications is fueling significant consolidation of the nation’s cancer care system, with large hospital systems seeking to acquire community oncology practices in pursuit of increased 340B discounts. This leads to closures of local oncology clinics, shifting patients to more expensive hospital settings and often forcing them to travel longer distances to get the care they need. Larger 340B hospitals were responsible for about 80% of hospital acquisitions between 2016 and 2022.
The lack of transparency in 340B has a real impact on Illinois patients.
“It’s unacceptable that some hospitals misuse 340B savings while patients struggle with outrageous medical bills. I was one of the lucky ones — someone stepped in to help me. But no one’s survival should depend on luck,” said LaTia Maxwell, a Tigerlily Foundation ANGEL advocate living in South Holland.
“Any expansion of the 340B program without transparency measures to ensure savings are not being used to pad the bottom lines of health system middlemen runs in direct opposition to efforts, including those championed by Governor JB Pritzker, to address how profiteering practices negatively impact patients and independent pharmacies in Illinois.”
Unless we instill much-needed transparency into 340B, bad actors will continue to profit off the underserved communities the program was meant to protect. State lawmakers must not advance SB 2385/HB 3350, or any legislation that expands the program and allows for its continued abuse at the hands of for-profit middlemen.
A patchwork approach to 340B legislation will only enable for-profit corporations and large hospital systems to profit, while failing to support patients in need through increased access to care. Lawmakers should follow the Governor’s lead and focus on efforts that will meaningfully support patient access and reduce costs at the pharmacy counter.
“Unless we instill much-needed transparency into 340B, bad actors will continue to profit off the underserved communities the program was meant to protect. State lawmakers must not advance SB 2385/HB 3350, or any legislation that expands the program and allows for its continued abuse at the hands of for-profit middlemen.”
Maimah Karmo is a breast cancer survivor and is the founder and CEO of Tigerlily Foundation, a national women’s health and oncology organization.
Gary E. Kay, M.D. is a board-certified oncologist and internist at Northwest Oncology & Hematology in Rolling Meadows.
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That’s a lot of decision-making for someone who is still grappling with the news of a cancer diagnosis. Speaking from experience, the amount of information and required decision-making can feel overwhelming. Cancer treatment decisions are about protecting your life and your future; but especially with surgeries that change our appearance, they can also be about protecting our sense of self along the way.
Amy chose a skin-sparing mastectomy with the intention of having reconstruction surgery later. She ultimately decided against reconstruction or even a surgery to have the extra skin removed and tucked flat—she just didn’t care enough to go through another surgery.
Katelyn Carey, RN, is a nurse educator and author who specializes in the science of compassion. Using trauma and cognitive science in combination with 20 years’ experience in ER, hospice, and acute care, Katelyn teaches communication strategies and recovery tools that help patients and caregivers navigate stressful times successfully. She is author of Beauty After Breast Cancer.
