David Hogberg was right to express alarm recently in The American Spectator about some of the Trump administration’s plans to reduce the cost of prescriptions drugs in the United States.
Hogberg was especially concerned with President Trump’s past remarks in support of drug importation and in striking the law that forbids government from bidding on drugs for Medicare Part D.
It’s true that drug reimportation is not the panacea President Trump may believe it to be. It doesn’t save much. It risks importing fake or dangerous knockoffs, and it punishes American firms for developing new drugs. And allowing the government to negotiate Medicare prices has its problems.
But that wasn’t primarily what Hogberg was concerned about. He’s worried about the 340B program to which none of this applies. The 340B program was designed in the early 1990s to enable rural hospitals and hospitals that treat a lot of indigent people to obtain drugs at lower costs.
The program requires pharmaceutical companies that want to sell through Medicare and Medicaid to offer popular drugs at prices 20 percent to 50 percent below normal list price. Hogberg contends the program, which accounts for 2.6 percent of the $457-billion market, raises the price of drugs and thus insurance for everyone.
But there is no evidence that the program raises overall drug prices, curtails research and development spending, or limits access.
What seems to bother Hogberg most is that hospitals that treat indigent patients also use the discounted drugs for their insured patients, meaning they get paid full price for discounted drugs. But what he misses is hospitals do not do this to get rich. They do it to offset some of the other costs of treating these patients.
The 340B program ought to be near the end of the line of things President Trump addresses as he seeks to make America great again. It is paid for by drug companies, not taxpayers (except for a small administrative function), and it performs for the most part as intended.
Yes, some insured patients receive 340B drugs. And yes, hospitals collect full fees for those drugs to offset other costs. The battle now is between drug companies trying to change the rules to limit the reach of the program and hospitals that use the money to fund programs they otherwise would have to abandon. And many of those programs give indigent patients access to medical treatments that otherwise would be available only to the rich.
Hogberg is right to worry about some of the healthcare pronouncements coming out of the Trump White House. But 340B is a success story the president should leave alone.