As a gastroenterologist practicing in Colorado, I pride myself on delivering care at the highest level. Every day, my focus is on creating an environment where my patients feel heard, cared for, and part of a community. This commitment drives everything I do. Yet, there’s a significant challenge threatening the sustainability of independent practices like mine – a lack of transparency and accountability in the 340B Drug Discount Program.
The 340B program was designed to help covered entities such as hospitals, community health centers, and specialized clinics in Colorado serve vulnerable patients by allowing them to purchase medicines at steep discounts. Savings were intended to be reinvested into patient care, and in theory, this is a commendable mission. However, in practice, the program has become a financial advantage for large health systems and pharmacy benefit managers (PBMs) – third-party administrators who manage prescription drug programs for insurers and employers.
Even more concerning is the growing evidence that large tax-exempt health systems in the state are profiting from billions in discounts. The patients the program was intended to serve are left wondering why this program is not helping them.
For instance, at my practice, scheduled infusion services are critical for treating conditions like Crohn’s disease and ulcerative colitis. These are more than just treatments – they are vital touchpoints where we monitor patients’ progress, conduct necessary lab work, and ensure their bodies are responding properly to their therapy. However, the financial pressures on small, independent practices caused by a broken 340B system have made it increasingly difficult to sustain these services.
We often operate on razor-thin margins, and unlike large hospitals, we don’t have the financial luxuries provided by the 340B program. This creates an uphill battle for independent practices to compete. Many gastroenterology practices across the country are now questioning whether they can continue to offer infusion services at all. When infusion services are limited, patients lose access to convenient, community-based care.
The impact of the 340B program extends beyond limitations on specialty care. Covered entities, such as large tax-exempt hospitals with a 340B designation, can purchase drugs at a 20-50% discount and then impose substantial markups when submitting claims to insurance companies. A recent study found that these hospitals earn 6.59 times more per drug unit than independent physician practices, creating an unfair financial advantage. For practices like mine, this gap makes it increasingly difficult to stay afloat, as the revenue generated by 340B discounts enables large health systems to sustain their operations and expand their services.
The lack of transparency around 340B only exacerbates this situation. While large hospitals benefit from the program’s substantial discounts, they are not required to disclose how – or if – those savings are being used to benefit vulnerable patients. Instead, large health systems in Colorado seem to be using their 340B windfall to expand their footprint by acquiring independent practices. Meanwhile, practices like mine – who do not have access to 340B pricing are left competing on an uneven playing field.
I wholeheartedly support the original intent of the 340B program – to help underserved patients access medications. However, for the program to live up to its mission, there must be transparency and accountability. As it stands, 340B proposals like SB71 raise more questions than answers as to how the program will ensure savings are passed on to patients. We cannot continue to gloss over the fact that this program generates billions of dollars, yet there is no evidence that the patients the program was created to serve are actually benefiting.
Without patient-centered reforms, we risk a future where independent practices are no longer sustainable. If that happens, it’s not just providers like me who lose – it’s the patients who depend on local, accessible, and personalized care.
