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The ObamaCare Gravy Train Hits A New Stop

Michelle Obama’s former classmate at Princeton who is a senior vice president at CGI Federal, the company that received a half a billion dollar contract to build the ObamaCare website, is not the only crony on the ObamaCare gravy train. Major corporations like CVS and Walgreen’s have hitched their wagon as well.

Part of Obamacare included a major expansion of the federal 340B discount drug-pricing program. Created in 1992, the program forces drug makers to provide discounted drugs to certain health care facilities that provide general health care services for the poor, indigent and uninsured — in theory. Lawmakers envisioned that health care providers would contract with pharmacies to purchase these discounted drugs and the discount would be passed along to low-income patents struggling to afford the cost of the drugs. Instead the program has become a racket for investors and billion dollar companies who are taking advantage of the program and stiffing taxpayers at the same time.

Thanks, in part to the expansion of the program under ObamaCare, rather than assisting the poor, the program has morphed into a moneymaking enterprise that makes hundreds of millions of dollars for profit-making and non-profit hospitals, as well as, the pharmacies — some of whom are now lobbying Congress for even further expansion.

Here is how the scheme works: Hospitals and other health care facilities are getting the drugs at a discounted price but are turning around and charging consumers and their insurers full freight. In many cases, Medicare is also paying the full price of the drug. The difference between the discounted price and the full price has become a profit-making center with consumers and taxpayers paying the difference. Rather then saving money for the poor and indigent, the different is being stuffed into the pockets of corporate executives and investors.

In 2010, after the expansion, the Obama administration wrote regulation that allowed all covered health care facilities to use a limitless number of pharmacies to fill their patients’ prescriptions instead of just one pharmacy, which had been the norm starting in 1996. As a result, the number of single pharmacies operating as a 340B contract pharmacy has grown by 770 percent, from 3,785 pharmacies participating in 2010 to 30,046 in 2013.

The Charlotte Observer reported last year that Duke University Hospital purchased $66 million worth of drugs through the discount program, saving $48 million. It then sold the drugs to patients for $136 million, making a profit of $70 million. Government work at its finest.

Recently, the New York Post reported that some of New York’s largest non-profit hospitals had jumped on the 340B gravy train:

“ The city’s top nonprofit hospitals enjoy the tax-free perks of charitable organizations and receive millions of dollars in state aid — yet spend less than 2 percent on the poor in the form of free care. New York Presbyterian — the city’s wealthiest hospital — raked in $3.9 billion in revenue in 2012, but administered a paltry 1.03 percent, or $37.6 million, of its total expenditures in free care for the uninsured, according to the most recent tax documents available. Meanwhile, it paid Executive Vice Chairman Herbert Pardes $5.58 million and CEO Steven Corwin $3.58 million that year.”

This is just the latest Obamacare outrage that should add fuel to the repeal fire.


Roberto Escoban

Roberto Escoban

Roberto Escoban is the pen name of a conservative activist who spent 20 years working in Washington including a decade on Capitol Hill.

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