GOP Lawmaker Calls for Transparency in Drug Discount Program

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By Bronwyn Mixter

Congress must ensure accountability and transparency in the federal 340B drug discount program, Rep. Morgan Griffith (R-Va.) said Oct. 11.

While the 340B program helps hospitals and other eligible entities stretch their resources to help care for uninsured and underinsured patients, the dramatic growth of the program and the lack of information about how it is used have led to questions about whether it has grown beyond Congress’s original intent, Griffith said at a hearing of the House Energy and Commerce Oversight and Investigations Subcommittee. Participating hospitals and other covered entities told the subcommittee they spend more on charity care than they receive in 340B savings, but a coalition says newcomers to the program aren’t providing enough charity care.

Under the program, drug manufacturers provide outpatient drugs to covered entities, such as safety-net hospitals, at significantly reduced prices. Currently, covered entities aren’t required to report the savings they receive from the program and how they use those savings to the Department of Health and Human Services. The pharmaceutical industry has been critical of the program and wants Congress to make changes to the program to ensure it is benefiting patients.

Rep. Greg Walden (R-Ore.), chairman of the full committee, agreed with Griffith, saying the lack of transparency requirements has resulted in inconsistent data and better data are needed. But he offered some praise for the program, saying he’s met with officials at rural hospitals who have told him it is vital to maintaining their levels of charity care. “For some entities, this program is the difference between keeping their doors open and closing,” he said.

Meanwhile, Rep. Frank Pallone Jr. (D-N.J.), ranking member of the full Energy and Commerce Committee, said a panel investigation “found covered entities rely on 340B funds to provide a diverse range of essential services to the community.” According to Pallone, the discount program could be improved by increasing transparency, but it’s clear that 340B entities are using the savings to provide care, and Congress should support these efforts.

A House Energy and Commerce Committee spokeswoman didn’t return a request for comment on whether the panel has planned any actions related to the 340B program.

Savings From 340B

Representatives from hospitals and other covered entities told the subcommittee they use the 340B savings for charity care, but the savings are significantly less than what they actually spend on charity care.

Ronald A. Paulus, president and chief executive officer of Mission Health, said Mission Health saved $37.4 million through the 340B program in 2016 and expects to save a little more than $38 million in 2017. But the total value of Mission Health’s charity and subsidized government care was nearly $105 million in 2016, he said. Mission Health is a nonprofit, independent, community-governed health system in North Carolina.

Also, Sue Veer, president and chief executive officer of Carolina Health Centers Inc. (CHC), said total 340B savings for CHC were $561,620 in 2016, but that CHC provided $4.7 million in charity care that year. She said the 340B savings were, among other things, used to provide discounted services to qualifying patients and offer medication therapy management to promote clinical and cost-effective care. CHC is a federally qualified health center, also known as a community health center.

In September, committee leaders also sent letters to hospitals participating in the program to investigate how program savings are used to help patients. Rep. Diana DeGette (D-Colo.) said at the hearing that most recipients of those letters reported that the 340B program “is a vital source of funding, [and] many of those also have indicated the savings only cover a fraction of the care they provide.”

“The purpose of the program is to stretch scarce federal resources as far as possible and it seems like the providers are doing just that,” DeGette said.

Ted Slafsky, president and chief executive officer of 340B Health, a group that represents hospitals and health systems that participate in the program, said in a statement provided to Bloomberg BNA, “We’re pleased with the subcommittee’s bipartisan expressions of support for the 340B program.”

“The members heard compelling testimony from the witnesses about how 340B gives them the flexibility to use their savings not just to lower drug prices for patients, but to support wrap-around and preventive services tailored to their communities’ unique needs,” Slafsky said.

Drugmakers’ Report on Charity Care

In advance of the hearing, the AIR 340B Coalition Oct. 10 released a report suggesting that a growing number of 340B hospitals aren’t providing the appropriate level of charity care given their participation in the program.

AIR 340B is a coalition of patient advocacy groups, clinical care providers, and manufacturers. Members include the Pharmaceutical Research and Manufacturers of America and the Biotechnology Innovation Organization.

The report, conducted by Avalere Health LLC, said for new disproportionate share hospitals (DSH) participating in the 340B program for the first time in 2015, nearly seven out of 10 (69 percent) had lower reported charity care levels in 2015 compared to both 2014 and 2013, when they weren’t enrolled in the program.

The AIR 340B Coalition said in a statement it continues to call for increased oversight of the program and urges Congress to take further steps to improve it.

To contact the reporter on this story: Bronwyn Mixter in Washington at bmixter@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

For More Information

More information on the hearing is at http://src.bna.com/teT.

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