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U.S. Senate Committee Hears Perspectives on 340B Drug Pricing Program

March 15, 2018

A hearing focused on the 340B Drug Pricing Program reviewed the intent of the program and considered if changes are necessary to the law in order to fulfill the purpose of the program. The U.S. Senate Health, Education, Labor and Pensions (HELP) Committee’s hearing—Perspectives on the 340B Drug Pricing Program—featured testimony from advocates representing safety net hospitals, community health centers, health system pharmacists, and the pharmaceutical industry.

The 340B Drug Pricing Program requires pharmaceutical manufacturers to sell outpatient drugs at discounted prices to health care organizations that:

  • Care for large numbers of uninsured and low-income patients
  • Serve rural communities
  • Offer vital services to cancer patients and children

Senate HELP Committee Chairman, Senator Lamar Alexander (R, TN), restated that the original intent of the program is to “stretch scarce federal dollars as far as possible reaching more eligible patients and providing more comprehensive services.”

Ranking Member, Senator Patty Murray (D, WA), pointed to the program as a crucial tool in serving “patients and communities with the greatest needs and fewest resources,” and stressed that accountability and transparency should ensure that 340B entities are using the savings appropriately and that pharmaceutical manufacturers are providing discounts fairly.

Testimony provided by Dr. Bruce Siegel, President and CEO of America’s Essential Hospitals, reinforced the importance of the 340B Drug Pricing Program in supporting hospitals in ensuring that patients have access to affordable drugs and sustaining comprehensive services that are relied upon by vulnerable patients and communities.

Dr. Siegel emphasized how hospitals use the 340B program as a tool to counter unsustainable drug costs and provided examples that 340B savings make it possible for safety net hospitals to provide services such as:

  • Free clinics and community programs for primary and chronic condition care
  • Cancer and transplant care, including costly chemotherapy and anti-rejection drugs
  • Medical respite care for the homeless and case management for underserved patients
  • Training for rural hospital partners in high-risk labor and delivery and other specialized care

Senator Bob Casey (D, PA) noted that a diverse group of hospitals in Pennsylvania—serving big cities and small population communities alike—depends on the 340B Drug Pricing Program. Senator Casey highlighted that critics of the program fail to account for the full scope of the economic contribution and burden facing 340B hospitals when they directly compare 340B savings to charity care provided. Encouraging a broader perspective of the value of the program, Dr. Siegel responded by pointing to Pennsylvania-specific examples including Einstein Medical Center and Temple University Hospital which provide services and offer benefits that would not be counted within the narrow definition of charity care.

The American Hospital Association recent released a new study that demonstrates that tax-exempt hospitals participating in the 340B Drug Pricing Program provided $51.7 billion in total benefits to their communities during 2015.

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

A recent study prepared by L&M Policy Research and commissioned by 340B Health offers an analysis of 340B disproportionate share hospital (DSH) services to low-income patients. The analysis suggests that, relative to similarly sized acute care hospitals that are not 340B entities, 340B DSH entities:

  • Treat more low-income patients
  • Provide more uncompensated and unreimbursed care
  • Are more likely to provide specialized health care services that are critical to low-income patients but often are underpaid

The Senate HELP Committee has indicated an interest in holding a second hearing about the program, and the U.S. House Energy & Commerce Committee is contemplating legislation.

HAP continues to advocate for Congress to safeguard the long-term sustainability of the 340B Drug Pricing Program, and solidify the important benefits of the program that play a key role in helping hospitals balance the increasing burden of ever-increasing drug costs. Congress should promote program reforms that enhance transparency and accountability without placing onerous hardships on hospitals providing care to vulnerable patient populations.

Contact Laura Stevens Kent, HAP’s vice president, federal advocacy, or Jolene Calla, HAP’s vice president, health care finance and insurance, for more information.

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