Discount Drug Program Backers Skeptical of Proposed Changes

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By Greg Langlois

A House Democrat said April 26 he and his colleagues would use “whatever tactic we need” to thwart proposed changes to a federal drug discount program.

A legislative battle has erupted this year over what’s next for the popular 340B program, which enables health-care safety net providers to buy prescription drugs at discounted prices from pharmaceutical manufacturers.

Bills introduced in the Senate and House would increase reporting requirements to ensure hospitals and clinics are using the 25-year-old program to benefit patients and not as an income stream. But Democrats worry it’s an attack on the program itself.

“I’m for transparency, but they cannot use the argument of transparency and try to decrease and eliminate the 340B program,” Rep. Bobby Rush (D-Ill.) said at a Capitol Hill event highlighting the program’s benefits to minority populations. “We will resist that with everything that we have to make sure that that will never, ever happen.”

Legislative Proposals

Under the 340B program, drugmakers agree to provide drugs at deeply discounted prices to “covered entities,” including the approximately 40 percent of all U.S. hospitals that serve low-income populations. Hundreds of drug manufacturers participate in the program, including major players like Eli Lilly and Co., Merck & Co., Pfizer Inc., and Bristol-Myers Squibb Co.

Covered hospitals and clinics saved about $6 billion on their outpatient drugs on about $12 billion in discounted purchases through the program in 2015, according to a January House committee report.

“This program has been widely popular ever since it was created,” Rep. Doris Matsui (D-Calif.) said. “And it comes at no cost to the taxpayers. It should be something that everybody supports.” The program launched as part of the Veterans Health Care Act of 1992.

But drugmakers and some members of Congress say the program has grown beyond its original intent of helping hospitals and other eligible entities stretch their resources to provide care for uninsured and underinsured patients. They also worry providers aren’t using the savings they receive properly.

In January, Sen. Bill Cassidy (R-La.) introduced the Helping Ensure Low-income Patients Have Access to Care and Treatment (HELP) Act ( S. 2312), and in December, Rep. Larry Bucshon (R-Ind.) introduced the 340B Protecting Access for the Underserved and Safety-net Entities (PAUSE) Act ( H.R. 4710).

Both bills would place a moratorium on new hospitals entering the program—with the HELP Act specifically barring new nonrural hospitals—and impose additional reporting requirements, including how 340B entities used their savings.

But “[c]overed entities are already subject to regular audits,” Matsui said, while drug manufacturers aren’t audited nearly as much.

The pharmaceutical industry supports the bills, saying they’re needed to get the program “back on track,” Pharmaceutical Research and Manufacturers of America (PhRMA) President and Chief Executive Officer Stephen J. Ubl said in a statement after the HELP Act was introduced.

As to the PAUSE Act, an enrollment moratorium would halt “the long-time abuse of the 340B program by some of the nation’s wealthiest hospitals while ensuring that rural hospitals and grantees can continue to use the program to help patients,” Ubl said. “At the same time, the bill puts reporting requirements in place to prevent future abuses.”

But 340B Health, a trade group representing more than 1,300 hospital and health systems that participate in the program, said the PAUSE and HELP bills “would limit hospitals’ ability to access 340B savings and provide patient care,” the group said in a statement to Bloomberg Law.

“The HELP Act would also change the eligibility rules that certain 340B hospitals and their offsite clinics must meet to access 340B drugs, limiting the benefit of the program for hospitals and their patients,” 340B Health said. “The bills would impose new reporting requirements on 340B hospitals that would not shed light on what hospitals do with their 340B savings to help patients.”

Program’s Expansion, Purpose

There were 7,806 hospital sites participating in the 340B program in 2013, growing to 21,554 in 2017, according to the Government Accountability Office. The GAO says federal grant recipient sites increased from 12,377 in 2013 to 16,842 in 2017.

Critics say the program is growing too fast and too much, “but really it grew by congressional edict each time it grew,” Peggy Tighe, a principal at Powers Pyles Sutter & Verville PC who represents 340B safety net providers, told Bloomberg Law in an interview. “It wasn’t that we all made more eligible entities; Congress made who the eligible entities were.”

Ryan White HIV/AIDS clinics are one such federal grantee. The Ryan White Clinics and the Congressional Black Caucus sponsored the April 27 event.

“I think if you’re saying there’s explosive growth and we need a PAUSE Act and we need to have a moratorium on programs, it’s not too far of a stretch to assume what’s happening there is pharma wants to shrink the program,” Tighe said.

Tighe said critics want the program to be something other that “what it is right now"—a drug discount program strictly for uninsured patients, she said.

But Congress rejected that approach when it launched it, Tighe said, and instead chose to reach uninsured and underserved populations through hospitals, community clinics, and other safety-net providers.

Those advocating changes are “twisting an argument to make you think we’re doing something bad, that we’re not actually reaching the safety net,” Tighe said. “We absolutely are reaching the safety net.”

To contact the reporter on this story: Greg Langlois in Washington at glanglois@bloomberglaw.com

To contact the editor responsible for this story: Randy Kubetin at rkubetin@bloomberglaw.com

For More Information

S. 2312 is available at http://src.bna.com/ym0. S. 2453 is available at http://src.bna.com/ym1. H.R. 4710 is available at http://src.bna.com/ym4.

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