A federal program meant to help hospitals provide discounted medicine to low-income patients is facing renewed scrutiny after a string of fraud cases and spending disclosures involving hospitals that participate in it.
The 340B Drug Pricing Program allows eligible hospitals and clinics to buy prescription drugs at steep discounts from manufacturers. Congress created it to help nonprofit hospitals stretch resources for low-income patients. Hospitals are not required to pass the savings directly to patients or insurers, and that gap has drawn attention from prosecutors, auditors and lawmakers.
A $58 Million Fraud Case in Miami
One of the most striking recent cases involves Jean Jethro Alexandre, a Haitian foreign national who used the 340B program to defraud Medicare, Medicaid and private insurers of more than $58 million. Prosecutors say Alexandre recruited people to pose as patients, paid them kickbacks to accept fraudulent prescriptions, and then collected the reimbursements for himself. He used the proceeds to buy several high-end vehicles, a mansion near Miami, and other properties.
In a separate matter reported earlier this year, Sahra Noor, the sister of Rep. Ilhan Omar, ran a 340B clinic called the People’s Center Clinics & Services. Omar had previously spoken publicly about securing $2.2 million in funding for the clinic. More recent reporting indicates a law enforcement raid connected to Omar’s home was triggered by a text message found on her sister’s phone.
Settlements in New York and Virginia
Two hospital systems have also reached financial settlements tied to 340B-related billing practices. New York-Presbyterian/Brooklyn Methodist Hospital agreed to pay $17.3 million to resolve allegations that it paid unlawful kickbacks to physicians at a chemotherapy infusion center. Virginia Commonwealth University’s Health System Authority agreed to pay nearly $4 million after audits found that federal health care payors had been overbilled for radiation oncology services.
Separately, VCU’s Arts in Healthcare exhibit has been valued at more than $5 million. Other hospitals have made comparable investments outside direct patient care: Petersburg Medical Center has solicited artwork for a new wellness center, NYU Langone promotes a formal art program across its renovated campus, and Mayo Clinic has a partnership with a wellness and spa center.
Corporate Involvement
Large companies have also built business lines around 340B activity. Cigna’s chief executive described the insurer on a recent earnings call as a
