Lawmakers eye increased transparency, oversight in 340B drug discount program

The debate over the state of the 340B drug discount program continues to swirl. 

At a hearing last week before the Senate Health, Education, Labor and Pensions Committee (HELP), Republicans pushed for more transparency and oversight in the program. A new study from a hospital group, meanwhile, highlights the work that disproportionate share program (DSH) hospitals—which are one of the major beneficiaries of 340B—do to improve access to care for low-income patients. 

Representatives for hospitals, pharmacies and drug manufacturers weighed in on the issue at the hearing. Restricting access to drug discounts in the program would "irrevocably harm care, destabilize hospitals on which millions of Americans rely and put patients at risk," said Bruce Siegel, M.D., CEO of America's Essential Hospitals, in his testimony (PDF). 

"We are no less at risk today of unsustainable drug costs, and the 340B program remains our best hedge against high prices," Siegel said. 

RELATED: Who wins, who loses under 2018 changes to CMS' 340B drug discount program 

The 340B program—and whether it actually operates as intended—has been in the headlines over the past several months after the Centers for Medicare & Medicaid Services finalized a rule that would slash payments. CMS set the payment level for 2018 at up to 22.5% less than the average price of drugs, a change that will cut $1.8 billion in drug discount payments. 

Hospitals have railed against the change, and major industry groups sued CMS to block the changes. The case is currently on appeal in federal court. Meanwhile, pharmaceutical companies have latched on to criticisms about the program to deflect the blame for rising drug prices. 

A recent study suggested that some hospitals enrolled in the 340B program fail to pass drug discount savings on to patients. That study also found a link between 340B participation and hospitals buying up physician practices, particularly in pricey specialties such as oncology, presumably to boost discount payouts. 

RELATED: Hospitals, drug companies and oncology patients are in an uneasy financial dance 

Lori M. Reilly, executive vice president for policy, research and membership at PhRMA, echoed those concerns in her testimony (PDF), saying the lack of transparency in the program has allowed it to swell beyond its intended goals. 

"The lack of program standards for use of 340B discounts by DSH hospitals, combined with the significant growth of the program driven by these hospitals, has greatly transformed the 340B program," Reilly said. 

Sen. Lamar Alexander, R-Tenn., the HELP committee's chairman, said he sympathized with the economic concerns of 340B hospitals, but said additional oversight may be needed to ensure the discount program is working as it should. 

"One thing I would like to have more information on is how much of the discounted savings goes directly to the patient who walks in the door with a prescription," Alexander said. "We don't know how much goes directly to patients or how much is spent for other services that presumably benefit patients." 

Democrats at the hearing also seemed open to building more transparency into the program. In her opening statement, the committee's ranking member, Sen. Patty Murray of Washington, said lawmakers "can, and should, provide accountability in a way that strengthens and preserves this program." 

RELATED: 340B program doesn't cause drug price increases, study finds 

Meanwhile, 340B Health, a group that includes more than 1,300 hospitals that participate in the 340B program, released a study that highlights the financial struggles and amount of care these hospitals provide to patients with low incomes. 

Disproportionate share program hospitals in the 340B program delivered 60% of uncompensated care in fiscal year 2015, according to the study (PDF), though these hospitals make up just 35% of the total number of acute care hospitals in the U.S. The study examined Medicare data from that year at 2,505 hospitals. 

In addition, low-income patients make up 42% of the population for DSH program hospitals, while accounting for 27% at non-340B hospitals, according to the study. 

The “340B hospitals are often the only source of care for patients who struggle to make ends meet, and the drug discounts come at zero cost to the taxpayers," said 340B Health CEO Ted Slafsky in an announcement. "That’s why the 340B program is as vital today as it was when it was when it was signed into law by President George H.W. Bush 25 years ago.”