Joe Grogan, former director of the United States Domestic Policy Council, has raised concerns about the 340B drug pricing program. He said on X on April 8 that the program encourages large non-profit hospitals to acquire cancer treatment practices in affluent areas and profit from them.
"The 340B program incentivizes large non-profit hospitals," said Grogan. "to buy up practices, particularly cancer treatment centers. in wealthy areas so that they can pull them into their 340B network and turn them into pure profit center."
According to the Health Resources & Services Administration (HRSA), the 340B Drug Pricing Program was established in 1992 to allow eligible healthcare organizations to purchase outpatient drugs at significantly reduced prices. The program aims to help these organizations stretch limited federal resources and support care for underserved populations. However, there are growing concerns over whether some covered entities are using the savings from the program as intended.
A report from 2023 by the Medicare Payment Advisory Commission (MedPAC) highlighted that hospitals participating in the 340B program often earn significant margins on drugs, particularly oncology drugs. This has led to worries that these benefits may be contributing to provider consolidation and acquisition of medical practices. Policymakers are examining whether these margins align with the original mission of the 340B program.
A study published in 2018 on NCBI examined the impact of the 340B Drug Pricing Program on hospital-physician consolidation. The authors found a link between participation in the 340B program and an increased likelihood of hospitals acquiring physician practices, especially in oncology. The study reported a notable rise in hematologist-oncologists and ophthalmologists at hospitals after joining the 340B program.
Grogan currently serves as Chairman of the Board at Paragon Health Institute and is a Fellow at USC Schaeffer Center. He previously held positions as Assistant to the President and Director of the Domestic Policy Council, as well as Associate Director for Health Programs at the Office of Management and Budget.
