Washingtonians are struggling to afford already high health care costs, and those costs keep climbing. Sadly, I’ve seen this firsthand in my rheumatology practice, where patients are faced with expensive, complex drugs to manage their symptoms.
In 2019 alone, spending jumped 6.2% to $47.9 billion. Employers, families, and taxpayers are all feeling the strain. Something must change.
One little-known federal program, the 340B Drug Pricing Program, is quietly making things worse. Created by Congress in 1992, 340B allows qualifying hospitals and clinics to buy prescription drugs at steep discounts, typically 25–50%, with the expectation that the savings would help vulnerable patients.
While there are some good players in the system, too many hospital systems are using 340B to turn massive profits by buying drugs at 340B discounted prices and then charging patients and health plans the full price. It would be one thing if those profits were being spent directly on our most vulnerable patients, as the program intends. But instead, too many of them are using the funds elsewhere, footing patients with the bill.
Meanwhile, patients and employers pay the price. In 2022, Washington 340B hospitals devoted just 1.52% of their operating expenses to charity care, while continuing to pursue patients with four- and five-figure medical bills. When 31% of Washingtonians carry medical debt, it’s indefensible that 340B hospitals charge 7% higher prices than comparable non-340B hospitals.
A major driver of this growth is the explosion of contract pharmacies – pharmacies that partner with hospitals to dispense 340B drugs and share in the profits. These arrangements often have little to do with helping vulnerable communities. 25% of Washington’s 340B contract pharmacies aren’t even in the state, and 48% serve higher-income areas. Hospitals are expanding their revenue reach, not access to care.
As hospitals bring in billions in 340B revenue, they use those dollars to buy up small, private practices. This consolidation squeezes out independent practices, reducing competition and limiting patient choice. As care migrates from physician offices to hospital outpatient departments, costs soar. Patients and employers ultimately foot the bill while access to affordable, community-based care disappears. This particularly impacts rural and underserved communities.
Yet instead of reining in this runaway program, some state legislators want to expand it by codifying unlimited contract pharmacy use with no guardrails or transparency. That would only make costs worse for patients, employers, and taxpayers.
Almost 80% of Washington residents support ending 340B abuse. Legislators should listen. Patients deserve transparency and a 340B program that fulfills its promise to help people, not pad profits. It’s time to reform 340B and restore it to its original purpose.
Amish J. Dave, MD, MPH, is a rheumatologist based in Seattle and Bainbridge Island, Wash. and a board member of the Coalition of State Rheumatology Organizations.
