House subcommittee debates need for 340B oversight amid host of new bills

Michael Burgess and Doris Matsui question Debra Draper of GAO at a July 11, 2018 hearing.

On the heels of a watchdog report that pushed for more oversight of the 340B program, lawmakers were split on exactly how that oversight needs to be applied. 

During a two-panel hearing before the House Energy and Commerce Subcommittee on Health, lawmakers addressed an audit by the Government Accountability Office (GAO) last month that found the Health Resources and Services Administration’s (HRSA) oversight of 340B to be insufficient.

In his opening remarks, Subcommittee Chairman Michael Burgess, M.D., R-Texas, concurred with GAO's conclusion, noting that less than 2% of participating entities have been audited. 340B regulations badly need to be updated, he said: When the program began in 1992, the Cold War had just ended, and the internet age had barely begun.

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In contrast, Rep. Doris Matsui, D-Calif., said pharmaceutical companies have not received as much scrutiny as hospitals. She pointed out that HRSA has conducted 831 audits of federally covered entities over the last five years, but drug companies have only been audited 17 times.

RELATED: GAO: 340B hospitals, outside pharmacies need more oversight

“It’s important to recognize a good thing when you have it, and the 340B program is exactly that,” said Matsui, who introduced a bill last month that would bolster the program.

Meanwhile, Debra Patt of Texas Oncology stressed the need for transparency and accountability to ensure that savings go toward helping vulnerable patients rather than executive salaries or new buildings.

Charles Daniels, Ph.D., of UC San Diego Health added that 340B hospitals are already subject to a host of regulations, and program cuts would restrict his system’s ability to provide services to indigent patients. Fred Cerise, M.D., of Parkland Health and Hospital System agreed with the need for oversight by HRSA and transparency on the part of hospitals, but discouraged restrictions on hospitals, including a moratorium on new 340B entities and child sites.

RELATED: Azar says 340B changes are coming in bid to get a handle on drug prices

The advocacy organization 340B Health recently analyzed the impact of a proposal to raise the disproportionate share hospital adjustment threshold from 11.75% to 18%. About half of currently participating hospitals would lose eligibility, according to the report. These hospitals span 47 states, the District of Columbia, and Puerto Rico, and provided more than $10 billion in uncompensated care in 2017.

“No good deed goes unpunished," Rep. Joe Barton, R-Texas, who introduced the bill, said during Wednesday's hearing. "The 340B program was set up to be a really good deed, and word spread, and now, in my opinion, that program’s being abused.”

Richard Sorian, senior vice president of communications at 340B Health, rejected that argument. The “vast majority” of Congress does not support limiting the program, he said, pointing to the McKinley-Thompson bill, which has 199 co-sponsors, a mix of Democrats and Republicans. The legislation would nullify a rule by the Centers for Medicare & Medicaid Services that modified payment for certain drugs under 340B.