In its zeal to shrink the federal government, will the coming Trump administration disrupt a discount drug program that underpins the rural hospitals serving the communities that gave him their support?
Big Pharma hopes the 340B Drug Pricing Program, which gives hospitals and health clinics that serve low-income or at-risk populations steeply discounted drugs from pharmaceutical manufacturers, will be on the chopping block in January. Program advocates say that eliminating it won’t solve the problem the government wants to with program cuts — that is, lowering drug prices.
There’s another aspect: The working-class families it serves are the base of Trump’s GOP.
“This a program that benefits rural America, disproportionately almost,” said Rhiannon Marshall Klein, national director of advocacy for Community Voices for 340B.
The bipartisan program was created by Congress in the early 1990s to address rising drug costs. Under the provisions, Congress intentionally named certain types of medical facilities as “covered entities” that could benefit from the program. That way, the assistance the program was designed to provide would go to those who most need it, said Peggy Tighe, a principal at Powers Law and an advocate for covered 340B entities.
The “covered entities” serve low-income, poorer populations that tend to be un- or underinsured. Many, if not most, covered entities are in rural America — the heart of Trump’s base.
“Where you have mines or manufacturing plants,” Tighe added as Klein mentioned areas of rural Arkansas where drilling companies are reluctant to base operations without a nearby hospital.
You also have Trump supporters.
A little-noticed trend in the recent election: In every state that expanded protection of the 340B drug discount program through state-level legislation, Trump’s vote share was higher than in 2016 or 2020. However, in Virginia, where Republican Gov. Glenn Youngkin declined to sign into law a bill that fully protected the program, Trump performed worse.
Correlation is not causation, supporters acknowledge. States that have gotten redder are most committed to protecting the program.
“Unless you’re a progressive activist who got locked in stasis in 2012 and has only just emerged into the year 2024, it’s not news that the modern GOP under Trump is much more populist and much less inclined to automatically side with big business than was, say, the 2012 Romney-Ryan ticket,” said GOP strategist Liz Mair. “Set aside the hostility to the sector from figures like RFK Jr.; rank-and-file GOP voters are just very Big Pharma-skeptical at this point.”
One vital fact about 340B that is often misunderstood is that it is not paid for with tax dollars, Tighe said. It is a program administered by and paid for by pharmaceutical companies that sell drugs to nonprofit hospitals and health clinics, which can then provide them to patients at an affordable cost. The covered entities use the savings from the discount program to subsidize their operations.
“This is not government money,” Tighe said. “This is PhRMA money. If PhRMA wasn’t paying for it, the government would have to step in and figure out how to pay for drugs for poorer and low-income people.”
The program has its critics.
Chris Pope, a senior fellow at the Manhattan Institute and the former director of Policy Research at West Health, a nonprofit medical research organization, said the program at least needs increased transparency and interventions to slow its growth.
In 2023, covered entities under 340B bought $66.3 billion worth of outpatient drugs, according to the Health Resources and Services Administration.
Disproportionate Share Hospitals — a designation given to hospitals that care for many low-income, often rural patients — bought $51.9 billion of the total. Other large purchasers were children’s hospitals at $2 billion and rural referral centers at $1.5 billion. Ryan White clinics, which assist low-income people who have been diagnosed with HIV/AIDS and which participate through multiple designations, purchased more than $2.5 billion worth of drugs.
Critical access hospitals also received $956 million. CAHs must be rural, typically at least 35 miles from another hospital.
“In theory, the program’s supposed to be targeted at safety-net providers,” Pope said. “But in practice, it’s no longer really a program targeted at hospitals in particular areas or serving particulate demographics. The intent was never really that it would be a big subsidy for low-income hospitals.”
It remains to be seen how the coming administration will handle 340B. There are few clues in the background of Dr. Mehmet Oz, a former heart surgeon turned television talk show host who unsuccessfully ran for the U.S. Senate two years ago, who is Trump’s pick to run the Centers for Medicare and Medicaid Services.
Oz’s ties to the pharmaceutical industry caused waves in his 2022 Senate run in Pennsylvania, where he ran against the eventual winner, John Fetterman. His financial disclosures during the campaign showed that he and his wife owned stocks in several pharmaceutical companies, including AbbVie, CVS and Johnson & Johnson.
The drug manufacturers have frequently fought the 340B program, including winning a legal battle in May in the Court of Appeals for the District of Columbia Circuit, which upheld a lower court’s ruling that manufacturers could impose conditions on the distribution of covered drugs to health care organizations participating in the program.
340B advocates say the pharmaceutical industry wants to eliminate the program so it can set its drug prices without being mandated to provide discounts.
“Seventy to 80 percent of the growth in the program is attributed to specialty drugs,” Tighe said. “It’s in PhRMA’s power to shrink the program if they didn’t make their drugs cost so much. They’re the ones in control.”
Editor’s note: Jessica R. Towhey writes on education and energy policy for InsideSources.com. Reader reactions, pro or con, are welcomed at AzOpinions@iniusa.org.
