Senators on Thursday signaled their chamber will join the U.S. House of Representatives to push hospitals to report where they direct their 340B drug discounts, wading into the fierce lobbying battle between Big Pharma and hospitals that has been waging for months.
In an often-contentious Senate Health, Education, Labor & Pensions Commitee hearing Thursday, Chair Lamar Alexander (R-Tenn.) made it clear he wants to know where hospitals and clinics are applying the discounts they get from drugmakers, how much of the discounts go directly to patients and which kinds of programs the providers are funding for patients with the money that isn't directly passed on.
"That could lead to question of whether we could restrict [where the money goes]," Alexander said. "But one way to avoid restrictions is to help us know better what the money is going for."
The Senate has been cautious about stepping into the 340B fray, and Thursday marked the first significant move on the topic. House lawmakers of the Energy & Commerce Committee have been working on a packet of legislation spearheaded by Rep. Chris Collins (R-N.Y.), which range from a tax on hospitals who participate in the program, new reporting requirements and patient definition. A hearing on the bills is expected soon.
Bruce Siegel, CEO of America's Essential Hospitals, defended the status quo of the program during Thursday's hearing, arguing that the audits and enrollment processes for hospitals are sufficiently robust and that hospitals are "good stewards" of the program. But he couldn't give Alexander an estimate of how much of the drugmakers' discount goes to 340B-enrolled patients and how much goes to other services.
"Isn't that something we should know?" Alexander asked.
Siegel said 2015 drug spending hit $457 billion, and a Health Resources and Services Administration analysis put drug discounts that year at $6 billion, making drug costs accounted for by 340B discounts at 1.3%.
That annual drug spending figure was in stark contrast with data presented by Lori Reilly of Pharmaceutical Research and Manufacturers of America (PhRMA), who also cited HRSA data and said manufacturers gave $14 billion in discounts for 2016.
As of press time, PhRMA did not respond with the basis for the conflicting numbers.
On the GOP side, lawmakers homed in on the hospitals. Sen. Bill Cassidy (R-La.), who introduced a bill this year that would impose a moratorium on any new hospital enrollments in 340B, asked Siegel if he could support legislation requiring hospitals to pass the discounts to uninsured patients. Siegel said he would have to learn more.
Sen. Todd Young (R-Ind.) proposed direct reporting requirements from hospitals to Congress, calling the current system "loosey-goosey" when Siegel described how his association asks hospitals informally how they are applying the discount dollars.
House Democrats have mostly aligned themselves with the hospitals on 340B issues. On Thursday, Democrats of the Senate committee also sided more strongly with hospitals and flipped the transparency question back to drugmakers.
Sen. Elizabeth Warren (D-Mass.) blasted PhRMA for using a "trusted Washington lobby playbook" to redirect the conversation on high drug prices.
"The discounts worked out to a whopping 1.3%," Warren said of manufacturers' discounts in the program. She cited a Government Accountability Organization analysis that puts drugmaker annual profit margins at 17.1%."No matter what denominator you use, the loss they're kicking and screaming about is a tiny fraction of the many billions of profit."
Sen. Maggie Hassan (D-N.H.) said she wished PhRMA "advocated for transparency in their own businesses as they advocate for it in 340B."
And Sen. Doug Jones (D-Ala.), while criticizing both parties for not listening to one another and passing blame for drug prices, pointed out that the drugmakers' complaints about the discounts they are expending for the program "is not computing for people of Alabama, where 80% of hospitals in 340B are underwater and trying to stretch Medicaid dollars."
In her remarks, the committee's Ranking Democrat Patty Murray of Washington said transparency was needed for all parties involved in the program — a point Siegel repeated throughout the hearing — but blasted the Trump administration's moves to impose Medicare Part B reimbursement cuts on 340B hospitals and reiterated the importance of supporting the program.
"Skyrocketing drug prices are a dire problem, they deserve our urgent attention and serious solutions," Murray said. "Needless to say, rolling back rules to prevent overcharging from drug companies, and cutting back programs that help make drugs more affordable, is not going to get the job done."
The battle on Capitol Hill has been accompanied by a stream of rival analyses used by both sides of the debate to bolster their arguments. The Senate hearing followed the release this week of two new dueling analyses on how 340B works now.
A PhRMA-commissioned Milliman report on Wednesday said 340B hospitals had a higher per-patient pharmacy spend for hospital outpatient drugs than non-340B hospitals, and that the per-patient drug spend at 340B Medicaid disproportionate share hospitals is almost three times the spend of non-340B hospitals.
On Tuesday, 340B Health — a pro-hospital group — released a separate study that found low-income patients account for 41.8% of the care offered by 340B DSH hospitals, compared to 27.% for non-340B hospitals. While 340B DSH hospitals represented 38% of the hospitals in the study, they carried 60% of total unreimbursed and uncompensated care.
Since the House Energy & Commerce Committee released its report in January that recommended greater oversight of the 340B program, the legislative and lobbying push has continued to mount for issues ranging from patient definition to a change in statute that would define congressional intent.
340B hospitals say they are following the intent of the program, using some of the discounted money to fund charity care and outreach programs.
Alexander said the committee will hold at least one more hearing on 340B. In addition to Cassidy's bill, Sen. Chuck Grassley (R-Iowa) has introduced legislation that would step up hospital reporting requirements.
An edited version of this story can also be found in Modern Healthcare's March 19 print edition.
