The federal 340B program requires drug makers to sell their products to hospitals, which can then re-sell them and pocket the cash. It’s a case of the government picking winners (hospitals) and losers (drug manufacturers) among private market participants.

Hospitals argue that they need the money to help patients, but this claim is dubious and, even if true, is not the way government should be operating. A new report from the Congressional Budget Office shows massive growth in this program as hospitals and pharmacies exploit loopholes in the laws.

A bill in Michigan has passed the state Senate which would further expand the program, shifting even more funds from drug manufacturers to hospitals with little accountability in how they spend the money.

But the piper always has to be paid, and the result of this will be higher costs and fewer drugs for everyone else. At the same time, some members of Congress are working to rein in the program and limiting it to the people it was initially intended to help — low-income patients in select non-profit hospitals providing charity care.

The 340B program causes huge market distortions in health care. Limiting its use and realigning it to its intended purpose would be a good move.

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