A new study conducted by the non-partisan Pacific Research Institute (PRI) suggests that 3 Florida hospitals — Baptist Hospital of Miami, Orlando Health, and St. Joseph’s Hospital — accrued profits of hundreds of millions through a federal discount drug program.
The 340B program was intended to provide discounted drugs to grant uninsured and financially disadvantaged individuals access to medicines. Participating manufacturers provide qualifying clinics and hospitals discounts up to 50 percent or more off the costs for outpatient drugs.
In order to be eligible for the 340B Program, hospitals must meet certain requirements intended to ensure that they provide care to low-income, medically underserved individuals. Hospitals must be owned or operated by a unit of state or local government, non-profit corporations that have been granted state or local governmental powers, or private, non-profit hospitals that have contracts with state or local governments to provide health care services to low-income individuals who are not eligible for Medicaid or Medicare.
The PRI study claims that the three Florida hospitals tend to provide less charity care, while maximizing profits, stating that oversight of the program is loose, and susceptible to clerical errors leads to commonly occurring excess reimbursement.
“The 340B program is supposed to help vulnerable patients receive their medicines, but our study shows that 340B hospitals are more profitable than traditional hospitals while not providing more charitable care,” said Dr. Wayne Winegarden, author of the study.
Orlando Health recorded the highest profit increase, the highest executive pay, and the highest increases in executive pay, while St Joseph’s Hospital and Baptist Memorial of Miami surpassed $200 million in annual profit.
Baptist Miami’s charity care accounted for just 1.57 percent of its annual revenue. But, one of the hospitals disputed the findings of the study.
“The 340B drug discount program is a vital lifeline for safety-net providers, like Orlando Health, which, in Fiscal Year 2021 provided approximately $648 million in total value to the communities it serves in the form of charity care, community benefit programs and services, community building activities and more,” said a spokesperson from Orlando Health. “Savings from the 340B program help hospitals like ours support the cost of providing patient assistance and indigent care coordinators, medications at no charge to indigent patients being discharged, and care and prescriptions to patients suffering from chronic conditions like heart failure.
Baptist Health South Florida, Baptist Hospital’s parent company, and St. Joseph’s Hospital did not respond when reached for a statement.
Discounted 340B drug purchases amounted to $29.9 billion in 2019, 23 percent higher than its 2018 comparison, and accounted for approximately 8 percent of all administered prescribed drugs in the United States.
The study also highlights the diversion of 340B discounted medicines to non 340B-eligible patients, receiving duplicate discounts from both Medicaid and the 340B program when such duplication is prohibited.
The sample of 340B hospitals also found that participating hospitals have a higher than usual number of contract pharmacy agreements. While the average 340B Hospital has 20 contract pharmacies, the median hospital from the 340B sample has 54.
Winegarden worries that the 340B program is not serving its intended purpose, but instead being used by hospital administrators as a financial subsidy, advocating for legislative reform to the service.
“Since 340B revenues are growing robustly without a commensurate increase in the amount of charity care, fundamental reforms to the program are required,” said Winegarden. “These reforms should increase the stringency of the program to require that 340B healthcare providers and hospital systems serve the intended low-income populations, ensure that patients directly benefit from the financial discounts when receiving their medications, and restrict the scale and scope of the contract pharmacy program.”