06/09/2014 10:32 am ET Updated Aug 09, 2014

Dr. Dean's Faulty Diagnosis

Getty Images

I was disappointed to see Howard Dean's recent blog post criticizing a vital but largely unknown federal drug discount program called 340B. Dean may be a doctor and a gifted former governor, but it's clear he is spending more time on K Street with his drug industry clients these days than treating patients.

Big Pharma has been feeding Governor Dean industry-funded studies that (surprise surprise) say 340B should be scaled back because it is too big and may not be directly benefiting patients. The truth is that the program represents just 2 percent of the $329 billion U.S. pharmaceutical market and enables hospitals and clinics to carry out their mission to serve all patients regardless of their ability to pay.

Congress created 340B more than 20 years ago to help hospitals, community health centers and other federally funded clinics better serve their low-income patients. It requires drug companies to sell discounted medications to healthcare providers with high percentages of Medicaid, disabled and low-income seniors. The program has been so successful that it was expanded to children's hospitals when George W. Bush was president and to rural hospitals under the Affordable Care Act. The Obama administration has also made it easier for patients to receive medications closer to home by allowing hospitals and community health centers to partner with retail and community pharmacies.

Hospitals pass on the savings through discounted or free medications to uninsured or underinsured patients or by opening up clinics that, for example, take care of HIV-positive or diabetic patients.

The program improves lives for tens of thousands of underserved Americans every day.

Take the example of a 57-year-old Kentucky man with lung cancer who lost his job as a minister and his health insurance when he could no longer work. His three cancer drugs cost more than his monthly Social Security benefit of $680. Jewish Hospital in Louisville, which has been in 340B since 2005, got this patient the chemotherapy he needed at a price his family could afford. Two of his meds were free; a third cost him $40 a month (vs. $286 from a large big box chain).

Or consider Utah Valley Regional Medical Center in Provo, Utah, which uses 340B savings to run a clinic for preemies susceptible to a potentially life-threatening lung disease caused by a virus. It can be treated with an expensive drug (roughly $2,000 to $3,000 per dose) that must be taken for several months during the cold/flu season. On average, seven to eight babies come through the clinic per week. The clinic covers all costs for families without insurance. Those with insurance only pay their normal copay.

Dean says hospitals that get 340B drug discounts aren't providing enough charity care in return. This is highly misleading and misses the point. The level of charity care provided by a hospital is not the metric Congress devised for eligibility in the 340B program. Rather, a hospital must serve a very high percentage of poor patients to qualify. These hospitals take enormous losses to treat these patients. Charity care does not adequately track the uncompensated losses and bad debt hospitals must incur in their missions to treat all patients and for that reason the government chose not to make it the benchmark for entry.

And now, here's some important context. Providers eligible for 340B discounts buy $7 billion worth of drugs through the program annually. You'll be interested to know that pharmaceutical companies spend $27 billion just on direct marketing and advertising every year. That's a whole lot of Viagra and Cialis ads.

Is it too much to ask highly profitable multi-national companies to shoulder some of the burden of treating our most vulnerable patients? If the pharmaceutical industry is successful in shrinking or killing 340B, it would have a devastating impact on uninsured, underinsured and other vulnerable patients across America.

We are in a new era of healthcare - 340B is part of the solution, not the problem.

Ted Slafsky is the President and Chief Executive Officer of Safety Net Hospitals for Pharmaceutical Access, an organization of over 1000 hospitals and health systems that participate in the 340B program.