Karen Kerrigan, President and CEO of the Small Business & Entrepreneurship Council, said on May 13 that the 340B Drug Pricing Program has grown beyond its original purpose and is adding costs for small businesses that offer health coverage. She said Congress should reform the program so savings reach patients and employers.
“Small business owners are struggling to keep up with the rising cost of healthcare. Congress established the 340B Drug Pricing Program, which allows safety-net hospitals and clinics to purchase discounted drugs. Because Congress failed to stipulate that savings must go to patients, participating hospitals and clinics are extracting as much money as possible from the program, Kerrigan said in an op-ed published by the Washington Examiner.
“Due to 340B, the average small business owner in New York pays about $285 extra for every person it covers under its health plan each year. Small businesses already face tight margins and high healthcare costs. Those costs will only grow unless Congress revamps a program that was supposed to make healthcare more affordable,” she added.
The 340B program requires drug manufacturers to sell outpatient drugs at discounted prices to eligible safety-net hospitals and clinics. It was designed to help providers serving low-income and uninsured patients stretch limited resources, but does not require discounts to be passed directly to patients or savings to be used for specific services. Some policy research has raised concerns about transparency, program growth, contract pharmacy expansion, and whether savings consistently translate into measurable patient benefits, according to JAMA Health Forum.
An analysis from IQVIA estimates that New York employers and workers face about $446 million in annual 340B-related costs tied to lost prescription drug rebates, with costs projected to rise under a contract pharmacy mandate. The report says these expenses add pressure to employer-sponsored health plans and can increase coverage costs for businesses and workers.
Karen Kerrigan serves as the President and CEO of the Small Business & Entrepreneurship Council, a nonpartisan advocacy, research, and education organization dedicated to protecting small business and promoting entrepreneurship. Founded in 1994, the organization works on policies tied to business start-up and growth, job creation, innovation, investment, economic growth, and U.S. competitiveness.
