Tags: America's Forum | Exclusive Interviews | Healthcare Reform | Neil McCabe | prescriptions | subsidies | drugstore

Human Events' McCabe: Drugstores Have Hijacked Drug Subsidies

Friday, 16 May 2014 03:50 PM

By Courtney Coren

The expansion of the federal government's 340B drug subsidy program, which gives drugstores greater discounts on prescription drugs to be passed onto the poor, has been hijacked by major drugstore chains that are keeping the profits for themselves, says Neil McCabe of Human Events.

"Absolutely, it's a hijack," McCabe told J.D. Hayworth on "America's Forum" on Newsmax TV.

"This is a multibillion-dollar program, and it's growing like gangbusters, and they're working like heck to keep this piggy bank for themselves," he said.

Story continues below video.

The program was initially created under the Veterans Health Care Act passed in 1992, but was expanded under Obamacare.

The subsidy was put in place to offset costs for clinics either certified or run by the federal government and for hospitals that provide care to impoverished communities, McCabe explains in a piece he wrote for Human Events.

Under the law, drug companies have to offer steep discounts to these clinics and hospitals in order to continue to be able to sell the drugs to Medicare and Medicaid, as well.

According to the Obamacare expansion of the subsidy, drugstores such as CVS, Wal-Mart, Walgreens and Rite Aid now get this same discount from the pharmaceutical companies.

However, drugstores' profits have increased because they are still charging patients and insurance companies the full retail price, McCabe explained.

"There are estimates that this is going to be a $12 billion market in 2016," McCabe told Newsmax.

Republican Rep. Joseph Pitts of Pennsylvania, chairman of the Energy and Commerce Health Subcommittee, is conducting an investigation into the matter.

"Where Pitts really has his hook into the abuse is the fact that these hospitals and clinics had a moral obligation to pass on the discounted prices to the uninsured, and they had a moral obligation to take the profits from this program and to turn that over into greater spending for the community," McCabe said.

McCabe said that Pitts is not looking to gut the whole program but is looking to reform it.

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