A RedState article highlights a remarkable event that will happen next week -- a member of Congress will hold a hearing exposing corporate cronyism.
The issue is called 340B, a discount drug pricing program that was originally created to assist veterans get drugs they need at a cost they can afford. The relatively small program was around for nearly two decades before it was turned into a corporate profit center for hospitals and chain drugs stores by its rapid expansion in ObamaCare.
ObamaCare rapidly expanded the program to the point where corporations soon recognized they could take in large amounts of discounted drugs and then turn around and bill insurance companies and the government for their full cost. Policyholders and taxpayers are being shafted while hospitals and drug stores make hundreds of millions of dollars. Congress is finally taking a look at the scam:
Next week, the House Committee on Energy and Commerce Subcommittee on Health, Chaired by Rep. Joe Pitts (R-PA) will take its first look at the program. It will examine the genesis the program, an attempt to assist the poor to its current form -- a get rich quick arbitrage scheme that is helping investors and financial institutions rather than those in need.
A cottage industry of corporations and lobbyists has been spawned by the ObamaCare expansion of the program. The 340B Coalition has become the lobbying are of nationwide drugstore chains line Walgreens and CVS that have profited greatly from being able to take in drugs at a price-control rate and then billing Medicare and private insurance companies for the full cost of the drugs.
The 340B drug program was passed as part of the 1992 Veterans Health Care Act. The program was a subsidy program designed for “safety-net” hospitals serving underprivileged communities, compelling drug companies to sell drugs at steep discounts as a condition of their being allowed to participate in Medicare and Medicaid.
After the program's expansion in ObamaCare, investors recognized the potential locked in profits. Duke University Hospital pocketed nearly $70 million through the program. The Charlotte Observer reported the hospital "purchased $65.8 million in drugs through the discount program, which saved $48.3 million. It sold the drugs to patients for $135.5 million, for a profit of $69.7 million. The profit would have been $21.4 million if Duke had not participated. At Duke, about 67 percent of patients who received those discount drugs were covered by commercial insurance companies, which often pay hospitals many times over cost for medications. Only 5 percent of the Duke patients were uninsured.
They weren't alone. The Healthcare Corporation of America sold $1 million in converted bonds with an 8 percent coupon in April to finance marketing of its 340B software program that helps facilities maximize their profits through the subsidy program.
With the program clearly hijacked by cronies who care less about the poor, Rep. Joe Pitts (R-PA) has decided to take a look. If Republicans are serious about ending crony socialism, reforming or abandoning the 340B Program would be a good place to start.
