U.S. Senate Committee Considers Impact of 340B Program in Helping Hospitals Serve Their Communities in the Face of High Drug Prices

May 15, 2018

The U.S. Senate Health, Education, Labor and Pensions (HELP) Committee held a second hearing on the 340B Drug Pricing Program to examine its federal oversight and consider avenues to strengthen program integrity and promote transparency.

The HELP Committee previously heard testimony from advocates representing safety net hospitals, community health centers, health system pharmacists, and the pharmaceutical industry during a March hearing.

The 340B program allows health care organizations that care for large numbers of uninsured and low-income patients, serve rural communities, and offer vital services to cancer patients and children to purchase outpatient drugs at discounted prices. The program serves as a crucial tool for hospitals to stretch scarce resources to better serve vulnerable patients and communities across the commonwealth, particularly as the price of prescription drugs places an increasing financial burden on patients and hospitals.

During the hearing today, officials from the U.S. Department of Health and Human Services Office of the Inspector General (OIG) and the U.S. Government Accountability Office (GAO) provided testimony on the conclusions and recommendations laid out in oversight reports.

GAO indicated it will be issuing new reports in the coming months about:

The use of contract pharmacies, and financial arrangements with contract pharmacies and third party administrators

Program oversight by the Health Resources and Services Administration and audits

How discounts under the program are passed on to patients

Senators participating in the hearing noted the importance of having data and independent analysis to inform their policy decisions. At the same time, these senators also acknowledged that financial analyses may not reflect the true impact of policy changes on hospitals’ ability to serve their communities.

In addition to providing financial assistance to patients unable to afford their prescriptions, Pennsylvania hospitals have reported using savings from the 340B program to:

Fund other medical services, such as obstetrics, diabetes education, oncology services, and other ambulatory services

Establish additional outpatient clinics to improve access

Create new community outreach programs

Offer free vaccinations for vulnerable populations

The 340B program is subject to significant policy discussion in Washington:

Pennsylvania hospitals have raised concerns with a newly implemented payment policy that significantly undercut the benefit of the program by cutting payment by nearly 30 percent for certain drugs purchased through the 340B program. HAP has supported efforts by national hospital groups to overturn the payment policy through a legal challenge and legislation, H.R. 4392.

The U.S. House Energy & Commerce Committee issued a report that calls for significant changes to the structure of the program.

The Trump Administration unveiled a drug pricing blueprint last week. This week, the administration issued a policy statement and request for information (RFI) on ways to lower drug prices and reduce out-of-pocket costs for consumers. The RFI specifically asked for feedback on further changes to outpatient payments for hospitals participating in the 340B program.

HAP has urged federal policymakers to recognize that taking action on shortsighted policies, such as reducing benefits of the 340B Drug Pricing Program, does nothing to address the underlying causes of continually increasing drug pricing. In fact, it actually makes it harder for hospitals to manage high drug costs and help patients.

HAP continues to advocate for Congress to:

Safeguard the long-term sustainability of the 340B Drug Pricing Program

Solidify the important benefits of the program, which play a key role in helping hospitals balance the growing burden of ever increasing drug costs

Promote program reforms that enhance transparency and accountability without placing onerous hardships on hospitals providing care to vulnerable patient populations