The U.S. House of Representatives’ Energy and Commerce Subcommittee on Oversight and Investigations has convened hearings into the 340B Drug Pricing Program, seeking to foster greater transparency into the program and accountability for the savings dollars it generates.
On June 4, Subcommittee Chair H. Morgan Griffith (R-VA) addressed the committee chambers with remarks to open the proceedings, providing background on the 340B Program and the circumstances which led to the present hearings.
“The 340B Program was established by Congress [in 1992] to allow certain covered entities that provide care to a large number of underserved patients to purchase drugs at significant discounts from manufacturers. In theory, the savings are meant to be passed along to patients and to be reinvested in the community to help provide additional care or resources. But it is not mandated to disclose where these dollars actually go and how much is made from the program,” Griffith said.
“Thus, we in Congress, with our oversight authority, are mostly blind as to what happens with these dollars. When the Affordable Care Act was signed into law in 2010, the program rapidly expanded by allowing more entities to receive the discounted 340B price for drugs. Because of that and maybe some accounting issues, the number of covered entities participating in the 340B Program has increased from 8,000 in 2000 to 50,000 in 2020. Today, the 340B Program accounts for almost $54 billion in annual discounted sales, making it the second-largest federal prescription drug program.”
Griffith said that he believes many hospitals, including ones in his own district in Virginia, are using their 340B Program dollars appropriately, in order to keep their doors open – however, the congressman also cited reports of entities taking advantage of the 340B Program as cause for the current slate of oversight hearings.
One such report appeared in The New York Times and alleged that Bon Secours Mercy Health in Virginia did not use 340B Program savings dollars to improve care at Richmond Community Hospital for its poor and underserved patients, but instead to line its own pockets with profits.
“The New York Times asserted that over the years, services at this Richmond Community Hospital were slashed and departments closed, while Bon Secours used the hospital as a piggy bank and transferred millions out of Richmond to other hospitals within the system, possibly as far away as Ohio. This is a reverse Robin Hood scheme: Steal from the poor to help the rich,” Griffith said.
“One specific example in this report was Bon Secours using the Richmond Community Hospital to purchase a cancer drug for more than $3,000 and then turning around and selling that same drug that they had bought under 340B for more than $25,000 to a private insurer. This is $22,000 in profit alone from one single vial for one patient. When reports like the Bon Secours situation occur, it is Congress’s job to step in and provide oversight into this program.”
Griffith continued that the 340B Program is “a lifeline for many hospitals, health clinics, community health centers and many other health care facilities.”
“My district has more than 50 community health centers and 340B serves as a critical tool to help keep their doors open and to provide additional services for my constituents. When I visit these centers and hospitals in the district, they are very open with me about where their 340B dollars go and what they use it for. That is because my district is economically stressed, and health care providers rely on these dollars directly, to serve their patients,” Griffith said.
“I believe creating more transparency in the program so we can see where the dollars are flowing and ensuring the program is not being taken advantage of, is the first step. This will allow Congress to understand the full picture and ensure that the patients are the ones receiving the benefits of this program. The patient is the one who must come first in this, and they should not be caught in the crosshairs of any of the issues we will hear about.”
Griffith clarified there is no intent to end or cripple the 340B Program, but rather, to “get information on how we can make the program serve what was [its] intent: the economically-stressed areas and patients.”
Griffith added that the late Rep. A. Donald McEachin (D-VA) contacted him shortly before the latter congressman’s passing in 2022, and asked for his help in examining the 340B Program.
“He called me regarding a 340B news story relating to his district before the last election took place and mere weeks before his unexpected death and said, ‘If you are chairman of Oversight and Investigations on Energy and Commerce, I need your help on 340B.’ I told him we would work together. So, I am glad we can fulfill part of that promise,” Griffith said.
Desire for more transparency into the 340B Program has also been heard from officials across the country.
Julio Fuentes, President and CEO of the Florida State Hispanic Chamber of Commerce, penned an op-ed column for the Rochester, New York-based Democrat and Chronicle last month which opined that while the program was designed with good intentions, it has not achieved its primary goal and those same communities are feeling the expensive effects of its underperformance.
“Federal policymakers created the 340B Program in 1992 to lower the cost of outpatient medicines for uninsured and vulnerable patients being treated at safety-net health care entities through manufacturer discounts, but today its failing to reduce medication costs for the patients the program was designed to serve. Instead, patients are spending 2.5 times more on medicines at340B program entities than at non-340B entities. The 340B Program is also driving the consolidation of physician practices into hospitals, which reduces the availability of community-based provider options and forces patients into higher-cost hospital settings,” Fuentes said.
Fuentes also pointed to a recent report from the North Carolina State Treasurer on the 340B Program, which illustrated high markups to benefit health care entities, rather than patients.
“North Carolina 340B hospitals charged state employees an average price markup of 5.4 times their discounted acquisition costs for outpatient oncology infusion drugs, significantly higher thannon-340B hospitals. These markups resulted in exorbitant profits for hospitals, with some charging up to 12.7 times their acquisition costs for oncology drugs, putting considerable strain on the healthcare system. These practices disproportionately affect vulnerable communities, including Hispanic populations, who may rely on safety-net providers for essential healthcare services,” Fuentes said.
