Arizona opinion: Arizona must prioritize reform of Federal Safety Net Program

The high cost of living, coupled with rising healthcare costs, is dramatically impacting vulnerable Arizona patients living with chronic diseases. At a time when patients, families, and caregivers need relief from high costs at the pharmacy counter and grocery store, many Arizona hospitals, clinics, and for-profit pharmacies are compounding these burdens by exploiting a federal program designed to help underserved patients access the health care they need. Without policy solutions to ensure that concessions are passed down to patients, hospitals and other entities will continue to line their pockets at the expense of needy patients across Arizona.

In 1992, Congress established the 340B Drug Pricing Program to alleviate gaps in healthcare access nationwide. The program was originally designed to enable eligible healthcare organizations to procure outpatient drugs at discounted rates from biopharmaceutical companies. The program required those entities to demonstrate that they serve a federally pre-determined percentage of underserved or impoverished communities. Yet today, the program has transformed into a convoluted network of profit-driven maneuvers that often abandon the very patients who were intended to be the true beneficiaries of the 340B program.

At the core of the issue lies a disturbing reality: numerous hospitals, clinics, and for-profit pharmacies exploit loopholes in the 340B program to bolster their profits rather than uplift the communities they were designed to serve. Alarmingly, for-profit contract pharmacies, governed by 340B contracts, wield significant influence in determining healthcare affordability while patients struggle to access the necessary treatments. In Arizona, pharmacy benefit management (PBM) owned pharmacies, including Accredo and Optum, monopolize the majority of all 340B contracts. However, a mere 15% of the aforementioned for-profit contract pharmacies are in medically underserved areas. Meanwhile, according to the Pioneer Institute tool, available for all interested parties, the hospital with the highest number of contract pharmacies in Arizona requires poor patients to receive their drugs from pharmacies as far away as Massachusetts instead of the local drug store.

Similar to the for-profit contract pharmacies, certain hospitals and health centers are exploiting their involvement in the 340B program to line their pockets and extend their reach into affluent communities rather than underserved communities that the 340B program was initially intended to serve. This trend enhances services in wealthier areas at the expense of neglecting communities in dire need. For example, Arizona has 43 Medicare-certified Rural Health Clinics (RHC) per 7,909 rural residents – a devastating result indicating that Arizona health entities are not reinvesting in rural communities. Luckily, federal scrutiny over the 340B program is increasing, with many lawmakers raising concerns about the program’s integrity and effectiveness in serving the intended beneficiaries.

Arizona’s most vulnerable residents deserve better than to be marginalized in the wake of corporate profiteering. The 340B program does not have the regulatory oversight to ensure hospitals, clinics, and for-profit PBM-owned pharmacies pass savings from discounted drugs purchased through 340B directly to Arizona patients. Through continued exploitation of the program, the fundamental principle of 340B, rooted in aiding those in need, has been overshadowed by corporate greed. It is long overdue that Arizona lawmakers prioritize patients and take action to increase transparency and accountability within the 340B Drug Pricing Program. Without restoring the integrity of 340B and upholding its original mission of compassion and accessibility, patients across the Grand Canyon state will continue to lose out on treatments they need.