HB 383 rights wrong for healthcare

House Bill 383, now in front of the Delaware General Assembly, is intended to right some wrongs happening to safety-net healthcare providers that began during the pandemic. Since 2020, numerous pharmaceutical companies placed restrictions on the use of contract pharmacies to maximize profits. These restrictions hurt patients served by health centers like Westside Family Healthcare, La Red Health Center, Henrietta Johnson Medical Center and other safety-net providers. By limiting the number of pharmacies safety-net providers can contract with to obtain discount drugs under a federal program called 340B, manufacturers reduce the number of medications requiring discounts, increasing profits. As healthcare costs are rising and being felt by state budgets, more than half of all states have decided enough is enough and are pursuing or passing similar laws to protect communities in need.   

HB 383 seeks to reverse limitations on the number of pharmacies safety-net providers can contract with to obtain 340B discount drugs. The current limitations allow manufacturers to sell more drugs at higher prices, forcing Delawareans to decide if and how to pay full price for potential lifesaving prescriptions. At the same time, a lack of investment in primary care services contributes to higher healthcare costs as chronic conditions worsen and access is compromised. Not surprisingly, the result is more costly but avoidable hospital care. 

Drug manufacturers claim the 340B program has grown too large and impacts how much is spent on research and development of new products. However, one look at their financials reveals the truth about these multibillion-dollar companies. The latest headlines about exorbitantly priced blockbuster diabetes and weight-loss medications draining the Medicare program make it difficult to understand how drug manufacturers are harmed by what they refer to as an explosion of the 340B program. The financial help manufacturers receive from the federal government for research and development, and the billions paid for executive compensation and marketing contribute to the question—when is enough enough? The bottom line is that Delawareans are hurting while drug manufacturers are thriving. 

The 340B program is voluntary – pharmaceutical companies that choose to participate agree to sell outpatient drugs to safety-net organizations at discounted prices. Participation in the program unleashes massive Medicare and Medicaid payments for participating manufacturers’ drugs. If a company chooses not to participate, the federal government will not cover medication for payment under the Medicare and Medicaid programs. According to the Kaiser Family Foundation, Medicaid drug spending grew 47% from 2017 to 2022. For Medicare Part D, the CBO found that spending on prescriptions grew five times faster than inflation from 2009 to 2018 – the net cost of brand-name prescriptions more than doubled during this time. Pharmaceutical companies have a long history of benefiting from 340B participation with the aging population and Medicaid expansion.

If manufacturers genuinely believe the 340B program is out of control and feel the need to limit safety-net providers to contract with a single pharmacy to obtain 340B discounts, there are options – don’t participate in the program and discontinue the profits made through Medicare and Medicaid. But when is enough enough?

Manufacturers insist that the program is out of control because of the increase in the use of contract pharmacies. What manufacturers don’t openly share, along with the large Pharmacy Benefit Managers, is that the need to contract with multiple pharmacies is primarily driven by their actions, not where locations are most convenient for patients. For expensive specialty drugs, manufacturers will only use certain pharmacies, sometimes located in other states. Additionally, when a safety-net provider contracts with a large chain like CVS, those pharmacies typically require contracts with more than one location, even if it is not frequently used. Simply counting the number of contract pharmacies as a proxy for the program exploding is wrong. 

Actions that limit patients’ access to 340B discounted drugs hurt Delawareans and the state budget. Unlike Maryland and other states, Delaware safety-net providers do not retain the savings from 340B under the Medicaid program – the state budget benefits from the discounts directly. Also important to note is that the 340B program is considered a tax-relief program because taxpayers do NOT fund the savings generated. The state budget also benefits when Delawareans receive primary care and avoid unnecessary trips to the hospital for exacerbated chronic conditions. Delawareans benefit from accessible comprehensive primary care and affordable medication.

Pharmaceutical manufacturers’ attempt to dismantle the 340B program is out of control. When is enough enough? Six states have passed laws similar to HB 383, including Louisiana, Arkansas, West Virginia, Mississippi, Kansas and Maryland. Across party lines, state legislators saw through misinformation and provided much-needed relief to communities in need. Delaware legislators can do the same.  

The time has come for legislators to stop multinational, for-profit drug corporations from profiting from Delawareans. Enough is enough. Pass HB 383 and put the health of Delawareans ahead of for-profit, corporate greed.