Program in need of reform, not expansion
As a rheumatologist practicing in Chicagoland for more than 30 years, I see the cost pressures across the health care system every day.
Recently, I had a patient whose insurance mandated he receive an infusion in a large health system. The hospital was reimbursed two to three times what it paid to acquire the medication, while the patient’s out-of-pocket costs were 10 times what they would have been in my independent practice. My margin for the same drug would have been a fraction of what the big system recorded.
This is just one example of how the 340B drug pricing program drives up patient costs and contributes to health care consolidation.
340B was designed to help low-income and uninsured patients access lifesaving medications like the ones I prescribe. The program allows eligible hospitals, called covered entities, to buy certain medications at steep discounts, then bill payors full price. That margin was originally meant to be invested into charity care for vulnerable populations.
But patients rarely see any financial benefit from 340B pricing.
Instead, the program incentivizes covered entities to direct patients into larger 340B health systems and prescribe higher-cost medications. It’s also driving record consolidation. When covered entities acquire independent clinics, they extend their discounted pricing to a broader patient population, meaning more 340B revenue. This makes it increasingly challenging for independent physician practices like mine to compete, which is why there are approximately 30% fewer independent practices than just 10 years ago.
In Springfield, House Bill 2371 would expand the 340B program, reinforcing the same incentive structures that are contributing to higher costs and fewer choices for patients.
If Illinois wants to prioritize affordable health care, policymakers should take a closer look at 340B and pursue reforms that ensure affordability for patients and a level playing field for independent physicians.
Robert Katz
Westchester