This is the sort of crony capitalism that goes on every day but resides in the deep shadows of hospital bureaucracy and government reimbursements. It is balance sheet crony capitalism, cloaked in paperwork and nonsensical numbers only decipherable to those who deal with the programs in question.
(From Red State)
By way of background, 340B is part of a law enacted in 1992 that required drug companies to sell at steep discounts (up to 50%) to community health centers, clinics, and hospitals that serve a high percentage of patients that are less fortunate. That sounds reasonable enough, and initially, the program served a small number of clinics that were truly deserving of the discounts.
But as a new study from the Community Oncology Alliance exhaustively documents, hospitals began converting the program into their own personal money-making machine starting around 2005, after which the number of participants has skyrocketed 367 percent.
But what sets these guys apart from your average, run-of-the-mill Washington swamp denizen is that many hospitals aren’t even passing the discount they receive on to patients. There’s a convenient loophole in the law that requires the drug companies to sell the drugs at the steep discount, but allows the hospitals to charge the patients the full rate, pocketing the difference.