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  • GOP Can Curtail Crony Capitalism By Nixing ‘340B’ Scheme

    Are Republicans serious about ending cronyism?

    Rep. Joe Pitts (R-PA) is giving grassroots conservatives a chance to hope. Pitts has called a hearing of the House Commerce Committee’s Health Subcommittee next week to examine a government program that was supposed to help poor veterans but has turned into a cash cow for hospitals.

    It’s called the 340B program, and it’s been around for over two decades.

    The Washington Post reported last year:

    But growth in the 20-plus year-old program — sparked in part by the Affordable Care Act, which expanded eligibility — is signaling alarms among drug makers and some members of Congress. They say that some facilities should not be eligible and that the money they receive from the discounts is not always plowed back into patient care.

    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.

    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.

    The government appears to know that abuse is happening.

    A Government Accountability Office report confirmed that even some hospitals that just “provide a small amount of care to low-income individuals … could claim 340B discounts.”

    The 340B Program has become impossible to defend but that just means it has become a jobs program for K-Street lobbyists. Industries have formed the 340B Coalition and are pushing members of Congress to keep their gravy train running.

    Rep. Pitts deserves credit for shining the spotlight on the abuse of taxpayer money inherent in the system. Hopefully a reform measure is the next step.


    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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