Sen. Elizabeth Warren (D-Mass.) defended the 340B drug program and the hospitals and health centers that rely on it at a hearing last Thursday before the Senate Health, Education, Labor and Pensions (HELP) Committee on which she sits.
The 340B Drug Discount Program requires drug companies to provide discounts to safety net hospitals and health centers. Providers like the program – indeed, some say they need it to survive financially – because it allows them to stretch federal dollars to maintain services for their low-income patients and communities. Drug companies argue that not all hospitals taking advantage of the 340B merit the discounts.
At Thursday’s hearing, Warren noted that the sum total of discounts the pharmaceutical industry provided to hospitals and health centers in 2015 was about $6 billion on total drug company revenue of about $775 billion.
“It is clear that the total loss to these drug companies – the loss that that they’re kicking and screaming about right now – is a tiny fraction of the many billions of dollars that they pull down every year in profits,” Warren said. She noted that the average drug company profit margin in 2017 was 17.1%.
The 17.1% margin was six times the average margin of the hospitals he represents, according to testimony provide by Bruce Siegel, M.D., the president & CEO of America’s Essential Hospitals. Sue Veer, president & CEO of Carolina Health Centers, said her facility operates at a margin of between 1 and 3% “at best” and without 340B the margin would drop to “negative double digits.”