New York’s 340B hospitals are profiting off patients like me

In 2016, my life changed forever.

While at work, I started violently shaking. It was the terrifying onset of my new life living with disabilities.

In the years since, I’ve learned how to navigate a healthcare system that’s as complicated as my own medical conditions. Often times, the very institutions that are supposed to help patients—hospitals, insurance companies and government agencies—impose the biggest obstacles to a patient’s recovery.

And just when you think you’ve overcome a barrier, you’re right back where you started.

That’s the story for patients like me that struggle to afford medications that help us manage our chronic conditions.

More than three decades ago, Congress created the 340B Drug Pricing Program to provide low-income and vulnerable patients access to affordable medications through safety-net hospitals. The 340B Program allows qualifying hospitals to purchase drugs at steep discounts, with the expectation that those savings would benefit patients and communities in need.

That’s no longer happening. With the help of corporate middlemen, hospitals have figured out how to exploit the 340B program by buying drugs at massive discounts and reselling them at incredible markups.

Instead of reducing the cost to patients, hospitals are charging patients like me full price.

A recent New York Times investigation details how a Texas-based corporate middleman even coaches hospitals on how they can generate higher profits off the 340B program. Apexus, which was originally selected by the federal government to negotiate better prices from drug manufacturers, has worked to “supercharge” hospital profits off the 340B program. Last year, sales under the 340B program reached $66 billion, making 340B the second largest drug program in the country.

Locally, Rochester General Hospital is a covered entity under the 340B program. According to its most recent tax filing, Rochester General Hospital is a billion-dollar business, reporting more than $1.475 billion in annual revenue.

The Rochester Beacon has documented the ongoing problems at Rochester General Hospital, including the outrageous salaries paid out to top executives. In 2020, just four RGH administrators earned $3.6 million in compensation.

One way that Rochester General Hospital makes money to pay its executives big bucks is through the 340B program. According to research from the Pioneer Institute, nearly a third of 340B contract pharmacies for Rochester General Hospital are located outside of New York.

A new peer-reviewed study published in the public health journal Inquiry offers an explanation for why 340B contract pharmacies are located out of state or in more affluent areas. The study found that the margins on 340B drugs were higher in wealthy areas.

Most contract pharmacies intended to serve poor patients in New York are located in affluent neighborhoods. A staggering 63 percent of 340B pharmacies supposedly serving the poor are in affluent neighborhoods in New York, allowing 340B hospitals to ignore the communities that truly need them.

Hospitals use 340B as a moneymaker, while neglecting the intent of the program. New York’s 340B hospitals provide less charity care than the national average. Less than two percent of New York’s 340B hospital revenues are dedicated to charity care.

Without a charity care requirement, hospitals are neglecting an urgent need to support our most vulnerable populations. In January, News10 NBC uncovered a new policy at Rochester Regional Health and RGH that requires patients to pay 100% of their share in advance before a non-emergency, outpatient surgery.

Not long after this, Rochester Regional announced they will be increasing their sponsorship status to the headlining sponsor of the Rochester International Jazz Festival, a staggeringly tone-deaf contradiction to their monetary reasoning for these anti-patient actions.

Patients deserve better. We need greater transparency, accountability, and affordability, not a system that allows hospitals and out-of-state corporate middlemen to profit off programs meant for patient care. We need laws that will require hospitals to report all 340B profits and transparent accounting for how 340B funds support patients.

Ian Scheil (iaNSAID)
patient advocate, Rochester

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