340B accountability under fire at Senate panel
- Congress once again turned its attention toward hospitals participating in the 340B drug prescription program, following a series of studies that have raised concern the program's incentives are skewed.
- Republicans on the Senate HELP Committee lined up to criticize 340B for what they described as lack of accountability and oversight for the program. Democrats appeared more sympathetic to the program, which they say helps the underserved, but also seemed open to transparency reforms.
- The hearing comes after CMS drastically cut payments under 340B and as the pharmaceutical industry seeks to shine on light on other industry players amid a national drug pricing debate.
The Trump administration has already moved to reduce drug payments to 340B hospitals in a final rule that took effect Jan. 1. The cut reduced payment from average sales price plus 6% to 22.5% less than the average price.
Hospitals immediately moved to sue over the cut, arguing it jeopardized their ability to care for vulnerable populations. The lawsuit is currently working through an appeal in the U.S. Court of Appeals for the District of Columbia Circuit.
The dispute pits pharmaceutical companies against hospitals, with drugmakers on a campaign to point fingers to other players in the pricing cycle amid the national drug pricing debate. The trade group PhRMA is running ad campaigns targeting both the hospital industry and pharmacy benefit managers.
Senate HELP Committee Chair Lamar Alexander, R-TN, expressed sympathy for the care 340B hospitals provide to the underserved, but said it may be necessary to require hospitals and clinics to report how they use savings from the program.
"One thing that I would like to have more information on is how much of the discounted savings goes directly to the patient who walks in the door with a prescription," Alexander said at the Thursday hearing. "We don't know how much goes directly to patients or how much is spent for other services that presumably benefit patients. Would that not be something we should know?"
Bruce Siegel, CEO of America’s Essential Hospitals, said he worried legislative requirements would intentionally or unintentionally restrict the program. “I would be concerned about legislation that only singles out hospitals and clinics rather than the full range of the program, including our partners in the drug manufacturing industry,” he said.
Alexander called that response inadequate, and said that if hospitals are actually spending the money to help underserved people, they should be happy to share that story.
“I think you’re passing the buck, that’s not a very good answer to me and you’re talking to somebody very sympathetic to you,” he shot back. “Why should I not want to know why a discounted program that benefits hospitals and clinics, what the money is going for?”
The American Hospital Association pushed back against assertions that the program is being misused. It argued the 340B program represents only “a very small portion of drug spending nationally,” and pointed to high lists prices set by pharmaceutical companies as the true culprit, in a written statement.
“The 340B program is working as intended. Under some transparency proposals, the program would not function better, it would simply reduce the number of 340B hospitals by increasing the burden of compliance. As a result, vulnerable communities could be harmed and implementation costs could increase for the federal government,” AHA wrote.
Democrats agreed that more transparency and accountability in the 340B program is important to ensure hospitals are using the savings appropriately and that drugmakers are providing discounts fairly. But they also said the 340B program is only a small piece of the overall healthcare system, and Congress must address high list prices by pharmaceutical manufacturers.
“We can, and should, provide accountability in a way that strengthens and preserves this program. Unfortunately, despite President Trump’s repeated promises to tackle drug prices, when it comes to the 340B program — which actually helps reduce drug costs — his record shows only broken promises and backwards steps,” Senate HELP Committee Ranking Member Patty Murray, D-WA, said in her opening remarks.
President Donald Trump’s proposed budget also called for changes, recommending that hospitals be required to report how they use savings from 340B. If those hospitals do not provide enough charity care, the proposed budget suggests reducing their payments.
The budget proposal came out shortly after the White House Council of Economic Advisers also suggested more oversight of 340B. CEA’s report floats the idea of creating an agency to set drug prices for eligible providers to purchase, with the eventual release of new guidance to reduce what it called “eligibility and profiteering.”
Alexander said Thursday the HELP Committee will hold more hearings on the program.
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