Dr. Anthony DiGiorgio headshot
“Consideration could be given to abolishing" the 340B program, Dr. Anthony DiGiorgio of Zuckerberg San Francisco General Hospital and Trauma Center writes in the policy journal Health Affairs. DiGiorgio says he receives funding from a free-market think tank "on Medicaid and access to care issues."

340B Hospital Physician Affiliated with Free-Market Think Tank Says Abolishing 340B Should be on the Table in Health Affairs Essay

A neurosurgeon at a San Francisco 340B hospital who once was a health policy fellow for U.S. Sen. Bill Cassidy (R-La.) and who is doing research for a free-market oriented think tank has written a stinging reply to former U.S. Rep. Henry Waxman’s (D-Calif.) recent ode to 340B in the journal Health Affairs.

“The 340B program was intended to provide a financial buffer for institutions such as the one where I work,” Dr. Anthony DiGiorgio wrote in his Feb. 1 response to Waxman’s Dec. 7 essay praising 340B on its 30th anniversary. “However, the 340B program has become gamed by large corporations to increase revenue. It is no longer serving its original intent.”

“Consideration could be given to abolishing the program and simply rolling the funds into one of the many other assistance programs” for low-income and rural hospitals, DiGiorgio said.

Rep. Waxman was one of 340B’s co-creators and was chair of the House Energy & Commerce Committee with jurisdiction over 340B. Cassidy is a longtime critic of 340B hospitals and is ranking Republican on the Senate Health, Education, Labor, and Pensions Committee with jurisdiction over 340B.

According to an online biography and DiGiorgio’s LinkedIn profile, he was health care policy fellow for Cassidy in the Senate in March 2019, toward the end of his residency at LSU Health Sciences Center in New Orleans. Cassidy, a gastroenterologist, graduated from and teaches at LSU Medical School.

DiGiorgio now is director of spinal neurotrauma at Zuckerberg San Francisco General Hospital and Trauma Center, assistant professor at the University of California San Francisco School of Medicine, and affiliated faculty at the Institute for Health Policy Studies at UCSF. His bio on Health Affairs said he receives funding from the Mercatus Center at George Mason University “on Medicaid and access to care issues.” Mercatus is a nonprofit think tank that promotes the importance of the free market.  Recent Mercatus research has criticized government drug price negotiation and Medicaid expansion.

DiGiorgio’s Arguments

Tax-exempt 340B hospitals are gaming the 340B program for extra revenue, DiGiorgio said in his Health Affairs article. Many qualify for federal and state subsidies, loans, and grants that provide “provide immense support,” he said.

The 340B program “has grown rapidly among hospitals that serve wealthier patient populations,” DiGiorgio wrote. “340B hospitals are expanding into more affluent neighborhoods, and they are mindful of payer mix as they move into areas with fewer publicly insured patients. 340B institutions are more likely to avoid counties with lower income levels and more uninsured patients. While Rep. Waxman argues that these revenues are being used to increase service lines for low-income patients, the evidence suggest that 340B hospitals did not increase care for underserved populations or increase their rates of uncompensated care.”

DiGiorgio said “it is misleading to state that the 340B program is without cost to taxpayers,” citing Medicare drug reimbursement for 340B hospitals at above average sales price, higher list prices on drugs in response to 340B discounts, and health care consolidation driven by 340B.

To reform 340B, DiGiorgio recommended “show[ing] where the 340B drugs are being resold and how much money hospitals are making from the program.”

“If the program truly is only helping low-income patients, these hospitals should welcome an enforcement mechanism ensuring the revenue goes toward services aimed at these patients,” DiGiorgio said. “Transparency and publicly accessible data will only enhance the argument that 340B is primarily helping vulnerable patient populations.”

DiGiorgio discloses in the Health Affairs piece that he receives grant funding from the Mercatus Center “for research around Medicaid and access to care.” He also disclosed receiving funding from DuPuy Synthes (a division of Johnson & Johnson) for a study on spinal instrumentation. Waxman disclosed in his essay that 340B Health, the trade group for 340B hospitals, is a client of Waxman Strategies, the consulting and lobbying firm which he runs with his son Michael.

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