One of the critical components for Mainers as they navigate the medical quagmire of insurance, providers and treatment is obtaining effective and safe drugs. Cancer treatment is often a long, taxing process and it is rarely cheap. Thankfully there are programs to help folks, especially people in dire financial positions, with the cost of their medicines.

In 1992, Congress created the 340B drug program, which requires manufacturers to provide large discounts to medicines for so-called “covered entities.” These entities include federally qualified health centers, family planning clinics, STD clinics, free-standing cancer clinics and several varieties of hospitals. The goal of the program is to “stretch scare federal resources…”  via the discounted medicines. However, over the last decade the program has grown from roughly $10 billion to $66 billion.

With that growth there has been little transparency and there is mounting evidence of abuse of the program. Many of the covered entities like FQHCs and Title X family planning clinics have state and federal reporting requirements. Hospitals do not have the same requirements, and their involvement has grown the program to the second largest drug program in the country.

Recently the Minnesota Department of Health released a report reviewing Minnesota’s program. The results were stark: while hospitals in Minnesota only make up 13% of the covered entities participating in the program they account for 80% of the net revenue. That means that of the $630 million in net 340B revenue more than $500 million went to large hospitals.

Hospitals are not the only large health entities profiting from the 340B program. Large chain pharmacies and pharmacy benefit managers (PBMs) such as CVS, Walgreens, Cigna, Walmart and UnitedHealth Group account for three-quarters of the contracts with covered entities.

In a recent interview, the director of the Community Oncology Alliance, Ted Okon, discussed an analysis by Avalere. He details how PBMs and insurers have financial incentive to run 340B drugs through their specialty pharmacies, which can result in even higher spreads and profits for the PBMs, insurers and hospitals. The PBMs, insurers and hospitals negotiate the markups and profit among themselves on the discounted drugs.

Unfortunately for the folks I work with, oncology medicines are often the most lucrative 340B drugs for hospital markups. In May of 2024 the treasurer of North Carolina released a report on the 340B program. The report found “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.”

Additionally, hospitals have been buying up oncology practices to use that cancer practice as a so-called “child site.” These “child sites” allow the hospital to qualify for 340B discounted oncology medicines, with little transparency and raises questions of whether discounts are being passed down to patients.  The American Cancer Society Cancer Action Network released a white paper that states that “While the incentive for 340B hospitals to expand impacts [sic] multiple specialty areas, it is especially strong for medical oncology.”

Small organizations like mine have reporting and transparency requirements that we must abide by. We hold events, raise money for patients and help people access early screenings. Our efforts, though lauded, are scrutinized, and we hold ourselves accountable to state and federal officials. Shouldn’t hospitals be held to the same standard?