340b Program Pros And Cons

Government Policies- 340B 2 There’s no such thing as a free lunch, they are often the most expensive. There is also no such thing as free prescription medications. The federal government offers a benefit in lieu of policies that would address the problems with the nation’s health care system. The 340B drug discount program is an example of the free lunch mentality. The U.S. health care system is very fatally flawed through retail prices for prescription medications those are way too expensive for some people to afford. In 1992 the 340B program was created by President George H.W. Bush and Congress in response to this
affordability problem. According to the 340B program pharmaceutical companies must sell their medicines to hospitals and other facilities that serve high populations deemed to be vulnerable at discounts up to 50 percent below market price. If the company refuses they will then lose their eligibility for
Medicaid reimbursement.
This program has grown larger then excepted with 90 planned hospitals, but now has over 1,700
hospitals.
There are now 20 percent of the nation’s retail pharmacies that have a contract for the
340B program. The program has helped many people from providers to taxpayers too. Providers can now offer their low-income patients’ lower-priced care and patients who would otherwise be receiving taxpayer subsidized care no longer need it, therefore saving taxpayers money. Hospitals benefit also because insurance companies reimburse them based on the market price of prescription medications, even though the hospital costs are based on the program. In this case the hospitals are able to earn a profit. Unfortunately the 340B program is not free. The costs of this program are hidden from public view. They are initially imposed on insurance companies and pharmaceutical manufacturers, but

Government Policies-340B 3 are not confined to just those industries. The costs are ultimately integrated into the overall healthcare system and are manifested through rising insurance premiums, declining
insurance coverage, declining innovation and productivity (especially for pharmaceutical drugs), and higher medical costs in unrelated segments of the health care system. Even though this program has helped many people it is simply the wrong way to fix the current health care system. It was only an approach to health care reform that asks the government to implement a new policy, and add greater complexity, in response to every adverse symptom of the health care market. The correct way to reform the U.S. health care system is to directly address impediments such as ineffective insurance markets, tort liabilities that incent defensive medicine, and licensing rules that eliminate competition. Once these impediments are eliminated effective health care reform will be created. The incentives for innovation and productivity will grow while creating policies that empower patients to control their own health care decisions. The U.S. health care system claims to have costless programs to solve specific ailments of the health care system, but in reality these policies impose ever growing costs on the health care system, worsens its efficiency, and fails to adequately assist those individuals who need it.