Report: State employees health care plan for drugs being overcharged



(The Center Square) – Nonprofit hospitals in North Carolina are overcharging the state employee’s health care plan for drugs, according to a new report by state treasurer Dale Folwell.

Nonprofit hospitals can receive deep discounts from pharmaceutical companies for drugs under a program called 340B. But those discounts are not passed on to state employees, the treasurer said.

“When treating teachers and state employees with cancer drugs, North Carolina 340B hospitals billed patients at 5.4 times their discounted acquisition costs, collecting an 84.8% higher average price markup than hospitals outside of the program,” Folwell said in a release. “Instead of serving vulnerable communities, 340B hospitals pursued higher profits by expanding into wealthier neighborhoods with higher rates of health insurance, where patients could pay more for prescription drugs.”

Folwell cited examples such as Atrium Wake Forest Baptist Health’s High Point Medical Center which charges an average of $5,353 for the oncology drugs that it acquired for an average $517, according to Folwell.

In a statement, Atrium Health said the 340B program is valuable to nonprofit hospitals but widely misunderstood by some.

“The program is not funded by taxpayer dollars and was never intended to lower the costs of medicines for patients, but rather as a way to provide savings for hospitals serving a high percentage of low-income patients,” the statement said. “The intent of the program is to preserve access to health care by offsetting losses incurred by hospitals that provide high amounts of uncompensated and undercompensated care, including the costs of prescription medicines, while treating patients.”

Folwell said health care providers frequently explain high prices as subsidizing low-income patients.

“It’s like a lot of programs,” he told The Center Square. “The hospital cartel has found a way to profit off something that was meant to be charitable.”

Health care costs for state employees “are almost all paid by the taxpayer through the appropriations process,” Folwell said.

New drugs are extremely expensive, Atrium said in its statement.

“Forty-seven percent of new drugs coming onto the market in recent years cost more than $150,000 per year,” the hospital said. “Discounts under the 340B program are essential for treating chronic illness, such as cancer, where a single dose of medicine can cost tens of thousands of dollars. The hospitals use these savings to ensure continued access health care in rural and underprivileged areas and to invest in better care delivery programs – often including medication assistance programs.”

Folwell is calling for state and federal legislation to reform the program “to provide hospital price relief to state employees and taxpayers.”

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