State Treasurer Folwell Finds North Carolina 340B Hospitals Overcharged State Employees for Cancer Drugs, Reaped Thousands of Dollars in Profits Per Claim

North Carolina Hospitals Used the Federal Safety-Net 340B Drug Pricing Program to Enrich Themselves Rather Than to Serve Vulnerable Communities

SEE REPORT: “Overcharged: State Employees, Cancer Drugs, and the 340B Drug Pricing Program”

(Raleigh, N.C.) – North Carolina State Treasurer Dale R. Folwell, CPA, will release a report finding that 340B hospitals charged state employees massive markups for oncology drugs. Hospitals generated thousands of dollars in profits per claim on cancer drugs paid for by the North Carolina State Health Plan for Teachers and State Employees.

The 340B Program was originally created to help safety-net providers serve low-income and rural communities, but it has become the second-largest federal prescription drug program in the nation. Under the 340B program, hospitals can purchase most outpatient drugs with an average 34.7% discount from drug manufacturers. Under current law, 340B hospitals have no legal obligation to pass these discounts on to patients or to invest the savings in vulnerable communities.

Treasurer Folwell invited researchers to analyze State Health Plan medical claims data on outpatient oncology infusion drugs as part the Hospital Transparency Project. With researchers from the University of Minnesota, the State Health Plan also analyzed data from the U.S. Health Resources and Services Administration, socioeconomic data from the U.S. Census Bureau’s Ameri¬can Community Survey, hospital audit¬ed financial statements and Medicare Cost Report data from the National Academy for Health Care Policy’s Hospital Cost Tool.

The researchers found that North Carolina hospitals pursued greater profits at the expense of vulnerable communities and impoverished patients. Despite the charitable intent of the 340B program, hospitals expanded its footprint into wealthier neighborhoods, where insured patients could pay more for prescription drugs.