As elected officials, it’s our responsibility to represent the best interests of our constituents, to take on the big policies, tackle the big challenges, and sometimes go toe-to-toe with the big players. We may have very different ideas about root causes, strategies, and solutions to address the issues facing the people we are so proud to serve, but our goal is the same – to serve Coloradans.
Though we sit on different sides of the aisle, we often hear similar concerns in our districts – especially about the rapidly rising costs of health care and prescription medications. Both parties have vastly different policies and platforms about how to rein in these costs, but we can both agree on one thing–transparency and accountability are essential.
That’s why we both sponsored Senate Bill 124, requiring hospitals to be fully transparent about their participation in – and their profits from – the 340B program, a prescription drug discount program that was meant to reduce costs for services to patients, but has expanded so rapidly it may now be actually costing Coloradans more.
The 340B program was created over 30 years ago to reduce the costs of prescription medications and increase limited services for rural hospitals, safety-net providers, federally-qualified health centers, and other clinics serving vulnerable, low-income populations. Since its inception, the program has exploded, growing at an average rate of 24% per year since 2015 and is now a whopping $66 billion, making it the second largest pharmaceutical program in the nation, outpacing Medicaid.
While it seems reasonable and even laudable to support the expansion of programs that ensure Coloradans can access the medications they need, more and more evidence is showing the profits large hospital systems receive from the 340B program are not passed on to patients, but rather pocketed by hospital systems and other entities, with little visibility into how these dollars are being spent. Because 340B dollars are attached to the hospital or clinic, the discount doesn’t follow the patient, and in fact most patients are unaware of the prescription discount their hospital received.
For example, if the hospital buys a $100 medication for a patient for $35 through 340B pricing, the patient goes to a contract pharmacy, as usual, picks up their prescription, paying the normal out-of-pocket costs to the pharmacy, while the hospital still charges the patient’s insurance company that full $100. If the patient is uninsured, the patient is on the hook for the full amount.
The contract pharmacy receives a fee and the hospital then keeps the rest of the discount – with the patient never seeing a cent of savings. Colorado workers, employers, union members, and state and local governments incur the full cost. In fact, less than 2% of patients ever receive discounted medication through 340B pricing, while studies show the 340B program is already costing Colorado employers over $150 million annually.
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Senate Bill 124 creates transparency and accountability in the system by requiring large, nonprofit, hospital systems to report their participation in the 340B program, the amount of profit from the program, and how they are using profits. Hospitals must also disclose what they are using on charity efforts and work to serve vulnerable populations –the intended beneficiaries of 340B. It also requires them to disclose the 340B services and their use of contract pharmacies.
We understand that while large hospital systems are profiting in the billions, rural hospitals and small clinics are facing enormous shortfalls and many have been forced to close their doors. However, expanding the 340B program may do little to address this very serious problem. In fact, studies indicate less and less money from the 340B program is going to actual safety-net hospitals and community health centers. For example, in 2012, nearly 40% of funding from the then $12 billion 340B program went to organizations like federally qualified health centers and other small clinics. By 2023, only 14% of the $66 billion program went to those same federal grantees – showing the significant growth of the program is not going to those it was intended to serve.
There is endless finger pointing in the health care debates, and as legislators it’s not our job to pick winners and losers or side with one actor in the health care system over another. It’s our job to always side with the hardworking Colorado families and businesses we serve, and support policies that ultimately reduce costs for them and improve their quality of life. Senate Bill 124 increases transparency and accountability in the health care system, while still protecting rural and safety-net hospitals and clinics.
While we don’t always find ourselves on the same side of an issue–reining in health care costs — this is one thing we can agree on.
State Sen. Barbara Kirkmeyer is a Republican representing Larimer and Weld counties. State Sen. Julie Gonzales is a Democrat representing Denver County.
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