340B Spotlight: ICYMI – 340B hearing, new reports highlight growing need for program reform

Evidence that the 340B program has strayed from its congressionally stated intent – and is now benefiting wealthy hospitals instead of patients – has been piling up, and members of Congress have taken notice. Just last week, the House Energy and Commerce Subcommittee on Oversight and Investigations held a hearing to examine how the 340B program is being used by 340B covered entities, including grantees and hospitals.

Convening five witnesses from hospital and care centers across the country, members probed on how providers use the revenue generated by the 340B drug discount program. The discussion highlighted the differences in how grantees and wealthy hospitals utilize the program. Witnesses from grantees, like community health centers, spoke to using the program for the benefit of patients, citing specifics on how they report and track their use of 340B revenue. Other witnesses on the panel, however, were unable to quantify whether their 340B revenue is used directly to benefit patients, raising questions on how that money is being used.

• “This is undoubtedly an important program. The dramatic growth of the program, however, coupled with a dearth of information about how it is used, has led to questions about whether the program has grown beyond Congress’ original intent.” – Vice Chairman Morgan Griffith (R-VA)

• “I think that investigations like this or programs like this, really are the core job of this committee. And I'm pleased that we are looking into the viability of the 340B program. … [T]his investigation was initiated to see whether recipients were properly using their savings, and that is certainly appropriate.” – Ranking Member Diana DeGette (D-CO)

• “Most surprisingly, many entities did not track their 340B savings at all. And until they received our request, didn't seem to have any idea how much they saved through participation in the 340B program. … [N]obody, first of all, is talking about eliminating 340B program … . I think when the average American hears what you would cut, not one of you said any overhead, capital construction, salary bonus.” – Chairman Greg Walden (R- OR)

Check out a full video of the hearing here.

In case you missed it, two new reports out this month also looked at the 340B program and noted ways hospitals are using the program to their own benefit.

1. AIR340B, of which PhRMA is a member, released a report looking at hospitals that joined the program in 2015 and hospitals that acquired more 340B sites in 2015 – hospitals with the opportunity to get more revenue from 340B in 2015. For both groups of hospitals, the report found that charity care levels decreased in 2015 compared to 2013 and 2014. Additionally, between 2013 and 2015, 340B DSH hospitals decreased charity care levels more substantially than non-340B DSH hospitals. Despite the additional revenue generated through the 340B program, the 340B hospitals analyzed in this study did not appear to use that revenue to increase the charity care they provide to patients.

2. A number of past studies have noted that patients pay more when their physician-administered medicines are provided at hospitals or hospital-owned physician practices because these settings tend to be more expensive than community-based physician offices. And a new analysis from Berkeley Research Group found that the 340B program is driving patients to these more expensive settings. Specifically, the analysis identified a significant shift in site of care from physician offices to more expensive 340B hospital outpatient settings for physician-administered drugs to treat breast cancer, rheumatoid arthritis and multiple myeloma in Medicare from 2008 to 2015. Increasing costs to patients, which is the result of this shift in site of care, directly undermines the purpose of the 340B program and its aim to help patients get access to affordable medicines.

All the work done by Congress and other government agencies, coupled with a number of studies over the years, have made it clear that the 340B program is no longer working for patients – instead it is working best for wealthy hospitals that take advantage of the program.  It’s time for Congress and the Administration to fix this program.

To learn more about the 340B program, visit PhRMA.org/340B.