Senate plans 340B oversight hearings as transparency push mounts
The Senate health committee is planning an oversight hearing for the 340B drug discount program, signaling the first significant move in the upper chamber to follow the U.S. House of Representatives' push for 340B reforms.
A Senate health committee spokesperson confirmed that Senate health committee Chair Lamar Alexander (R-Tenn.) is planning the hearings for early spring, but did not specify a date.
"As the committee of jurisdiction over the 340B program, the HELP committee has been analyzing the numerous reports, studies and proposals from other committees and organizations," a Senate health committee spokesperson said.
The House Energy & Commerce Committee is expected to hold hearings later this month on a packet of bills that would significantly change 340B operations.
Meanwhile, key senators have introduced legislation that scrutinize the drug discount program. Since last year, 340B has pitted hospitals and pharmaceutical companies against one another in a fierce Capitol Hill lobbying battle that puts lawmakers in the tight spot of navigating the interests of two powerful healthcare stakeholders.
On Thursday, Sen. Chuck Grassley (R-Iowa) released a bill that would require hospitals to report to HHS both the prices they pay to drug manufacturers for the 340B-discounted drugs as well as all revenues received for the drugs from private insurers, Medicare, Medicaid, the Children's Health Insurance Program and patients.
Grassley does not sit on the Senate health committee, but he has a long history of oversight efforts in the prescription drug and provider space as well as on 340B.
In the press release that introduced the bill, Grassley's office noted the 340B statute doesn't require hospitals to report the level of charity care they offer patients with the money saved with their discounts. This is a criticism lobbed frequently by pharmaceutical companies, which by law have to offer the discount to hospitals in order participate in the Medicaid drug program.
"Congress originally intended the program 'to stretch scarce federal resources as far as possible,'" Grassley's press release stated. "The 340B statute does not state how this is to be done."
Sen. Bill Cassidy (R-La.), who sits on the Senate health committee, is another vocal critic of the 340B program operations and he also has legislation on the agenda. He introduced a bill in January that would put a moratorium on new 340B hospitals or registration of associated sites, with an exception for rural providers.
Reps. Larry Bucshon (R-Ind.) and Scott Peters (D-Calif.) have introduced a similar moratorium in the House, which will be part of the Energy & Commerce Committee hearings.
The Senate's plans ride on the momentum that has built in the House Energy & Commerce Committee.
For months the upper chamber has been largely silent on any legislative effort while the Republican majority of that committee has has worked publicly to spur movement on the 340B program.
Bills upcoming in the House Energy & Commerce Committee include new reporting and transparency measures for hospitals who receive the 340B drug discount from pharmaceutical manufacturers, as well as legislation by Rep. Chris Collins (R-N.Y.) to amend the statute to define which patients qualify for the drug discount that is passed along to hospitals.
The Energy & Commerce Committee held its own hearings on the program last fall, which were followed in January with a Republican committee staff report that recommended greater congressional oversight.
The CMS' sudden introduction of substantial cuts to Medicare Part B drug reimbursements to 340B hospitals complicated efforts on Capitol Hill. These came into effect Jan. 1 of this year. The American Hospital Association estimated these cuts at $1.6 billion annually. Hospital groups led by the AHA sued the federal government late last year before the cuts were slated to go into effect, but the judge tossed the claim. Hospitals have appealed this decision.
Rep. David McKinley (R-W.V.), a staunch defender of the 340B program who tried to stop the cuts legislatively before they went into effect, continues to negotiate with committee leaders to halt them. He has told Modern Healthcare he is willing to consider trade-offs such as a moratorium on new sites.
As Congress makes its moves on the issue, PhRMA has maintained its own public campaign lobbying for the legislation currently in the works on Capitol Hill, including the "patient definition" provision and stepped-up oversight. In an advocacy brief on the program, PhRMA says "not all 340B hospitals are good stewards of the program," and target disproportionate share hospitals in particular, underscoring that 80% of 340B volume goes to these hospitals even though they represent 9% of the total 340B entities. They also accuse the majority of hospitals of offering low levels of charity care — 2.2% of their total expenses.
Hospitals are hitting back. On Thursday, the American Hospital Association released its own statistics that show hospitals in the 340B program in 2015 spent an average of 12.6% of their total expenses, roughly $51.7 billion, on community benefit.
"The program constitutes less than 3% of the more than $450 billion in U.S. annual drug purchases," the AHA report states. "Because it is funded by drug company discounts, not federal dollars, 340B doesn't cost the government one penny — but it makes a big difference to vulnerable communities."
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