LAX Leader

Dr. John O'Brien, a senior fellow at USC's Leonard D. Schaeffer Center for Health Policy and Economics, said health care organizations participating in a federal drug discount program might not actually be receiving the intended discounts from that program.

Established in 1992, the federal 340b program enables eligible hospitals and healthcare organizations to purchase outpatient medications at significantly discounted prices.

“Patients aren’t seeing the discounted drug price passed to them at the pharmacy counter," said O'Brien, who also is the president and CEO of the National Pharmaceutical Council (NPC), told LAX Leader. "The growth in contract pharmacies has largely been in rich and white communities, and 340B hospitals are charging patients with commercial insurance more than non-340B hospitals.” 

Health organizations participating in the 340B program can use the savings to fund for essential services and programs, such as free or low-cost medication assistance, expanded access to healthcare, and community outreach initiatives.

Participating organizations, however, “often extend their 340B discounts to clinics in well-off communities, where they can charge privately insured patients more than those on Medicaid,” reported the Wall Street Journal.

“In some cases, the program appears to be bolstering profits in well-off areas more than it is underwriting services in less-privileged neighborhoods,” said the Journal article.

“There’s a lot that is misunderstood about just how large the 340B program has grown," said O'Brien. "That growth has allowed the program to go far beyond its intended purpose and may be enabling profiteering under the guise of expanding charity care."

He said that not only are drug discounts not making it to patients, but patients might also have their overall healthcare costs driven up by the program.

"New evidence is showing that the 340B program is increasing healthcare costs for self-insured employers and their workers by $5.2 billion - with a B - each year," said O'Brien. "That same model showed that drug costs specifically were 4.2% higher for such employers and employees than if there was no 340B program.“

O’Brien has been the president and chief executive officer of NPC since 2021, and a senior fellow at the Schaeffer Center since 2020. 

He worked in several roles at the U.S. Department of Health and Human Services between 2017 and 2019, including senior advisory to the secretary. 

O’Brien attended the University of Florida, received his masters in public health from Johns Hopkins Bloomberg School of Public Health, and his doctorate in pharmacy at Nova Southeastern University.