It is often said that we are measured by how we treat the most vulnerable in our society. At Meals on Wheels of North Carolina, our mission has always been to provide needed care not only our seniors, but our homebound neighbors as well. More than 2.5 million seniors live in North Carolina, and an estimated 537,000, more than 25% live alone, and almost 223,000 (10%) live below the poverty line. Services like Meals on Wheels are essential to the lives of the people we serve.
That is why I was disturbed by a recent report by the New York Times citing the abuses of a hospital chain in neighboring Virginia which was using an obscure federal program called “340B” to rake in profits in the false name of “charity care.”
The 340B drug pricing program was established in 1992 to provide discounted drug prices to low-income patients. As it was originally written, the 340B program allows qualifying hospitals, federally qualified health centers and community health centers to purchase prescription drugs at a discounted price. These hospitals and community health centers then invest those savings into services not being covered by Medicaid, such as housing and nutrition programs. These services are collectively known as charity care. At least that is how it is supposed to work.
Over the last thirty years, the 340B drug discount program has ballooned into a cottage industry with non-profit hospitals using the profits from the savings to do anything but charity care. Hospitals are under no requirements to show how those savings are passed onto society’s most vulnerable patients. In fact, what often happens is that the hospitals bill insurance companies and government health programs for the full cost of the drug, even if they bought the medicine via the discounted 340B program. Hospitals are buying these drugs for a fraction of the cost, then charge the patients full price of the drug. All with no government oversight.
The abuse of the 340B program is happening nationwide. In 2021, North Carolina’s Treasurer Dale Folwell commissioned a study with Johns Hopkins Bloomberg School of Public Health which found that North Carolina’s largest nonprofit hospital systems benefited from $1.8 billion in tax breaks, but their required charity care spending did not exceed 60% of that amount.
The 340B drug pricing program needs more oversight. We need members like Representative (Richard) Hudson who serves on the House Energy & Commerce Committee to call for reforms and make sure those in need are benefiting from the program. More regulation is urgently needed before the 340B program gets any more out of control and vulnerable patients are left behind.
(Note: This is a rebuttal to a recent op-ed. Click here to read the piece by John Arcano.)
Alan Winstead is vice president of Meals on Wheels North Carolina and the executive director of Meals on Wheels of Wake County.
