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Almost everyone in New Jersey agrees that health care costs are too high, particularly for low-income families and seniors. However, there is a massive federal program, called 340B, to help the most vulnerable get access to discounted drugs. Yet because this policy is being abused by some large health systems, many patients never actually receive tangible benefits or drug discounts from this program.

Indeed, the 340B program is the second largest prescription drug program administered by the federal government — larger than Medicare Part D, Part B, or Medicaid. It was intended to help the most vulnerable get access to medicines and care by providing covered entities, such as safety-net hospitals, with discounted drugs. However, due to the program’s lack of transparency and oversight, large players in the health care system are taking advantage of deeply discounted medicines to make a profit at the expense of the patients most in need. In fact, these bad actors buy discounted prescription drugs, meant for low-income patients, and then turn around and bill other patients and insurance companies at much higher prices, pocketing the difference.

According to a study by the New England Journal of Medicine, there’s little to no evidence that any financial relief from this program ends up in patients’ hands. The report concluded that “financial gains for hospitals have not been associated with clear evidence of expanded care or lower mortality among low-income patients.” However, there are plenty of examples of hospitals using the profits to improve their facilities or invest in unrelated programs.

In Richmond, Va., a major nonprofit health system was charged with taking advantage of the poverty of Richmond Community Hospital’s patients to profit from deeply discounted drugs through the 340B program, according to a New York Times investigative report.

According to interviews with more than 20 former executives, doctors and nurses, the health system was slashing services at its safety-net hospital, Richmond Community, while investing in the city’s wealthier neighborhoods, using profits made from discounted drugs through the 340B program.

“[The hospital owner] was basically laundering money through this poor hospital to its wealthy outposts,” said Dr. Lucas English, who worked in Richmond Community’s emergency department until 2018. “It was all about profits.”

While well-intentioned, the biggest flaw in the 340B program is that the discounts don’t have to go to the beneficiaries for which they are intended. As a result, some hospitals are reselling and marking up discounted drugs to patients and insurance companies.

As large health care systems use these finances for their own special interests, the most vulnerable patients are unable to afford their medications. Since 2010, the program has grown by almost 500%, and it is now estimated that over 25,000 contract pharmacies participate in the 340B program, including more than 20 New Jersey hospitals. The lack of requirements for how 340B hospitals use the discounts they receive to help low-income patients has allowed this program to balloon in growth.

With so much evidence that many patients never see the benefits of 340B and that it drives up costs, this program needs serious reforms to ensure patients come first. Recent efforts to instill transparency in the system, including pharmaceutical companies suggesting a shift to rebates rather than discounts, would ensure patients receive the benefits of lower costs drugs rather than the hospitals. This appears to be a step in the right direction and should be considered by lawmakers looking to reinvent the 340B program to help those low-income patients that need it most.

Patients of all economic backgrounds should be afforded the opportunity to receive the high-quality care they need when they need it, especially as it is imperative to improving health outcomes in America’s underserved communities.

Jeanette Hoffman is executive director of Patients Come First, New Jersey.

More from the author:

• OPINION: When it comes to prescription drug policies, New Jersey must put patients first