New report finds more abuse of 340B program by hospitals and drug middlemen

A new report by the Wall Street Journal (WSJ) reveals abuse of the 340B hospital markup program is getting worse as hospitals and middlemen find new ways to profit off the program, according to a website posting by trade group Pharmaceutical Research and Manufacturers of America (PhRMA).

Why it matters: Big, tax-exempt hospitals and clinics abuse a little-known federal program to buy medicines at steep discounts and charge patients whatever they want. Abuse of 340B has become so profitable that cottage industries of for-profit companies are increasingly finding new ways to siphon money out of the program.

Vertical integration breeds abuse
Pharmacy benefit managers (PBMs), insurers, pharmacies and providers are often owned by the same company. This kind of consolidation of multiple links in the supply chain is known as vertical integration, which can create financial incentives for middlemen to steer patients to preferred providers and pharmacies where they markup medicines to generate more profit. It’s a big reason why half of every dollar