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Senators from both sides of the aisle expressed support for reforming the 340B drug discount program during a Thursday hearing in the Health, Education, Labor and Pensions Committee, although lawmakers also cautioned that a careful approach is needed to ensure the changes don’t hurt rural hospitals and health centers.
The hearing focused on concerns that 340B, while well-intentioned, has grown too big and will ultimately not benefit patients.
The program was created more than 30 years ago to allow health care providers serving large populations of low-income patients to purchase outpatient medications at a price significantly discounted rate. However, it has grown enormously. over the years. More than 60,000 participants now use 340B, up more than 600% since 2000, according to a report prepared earlier this year by HELP Committee Chairman Sen. Bill Cassidy (R-La.).
Federal spending has also increased along with the program’s growth, according to the Congressional Budget Office. The discount drug program encourages covered entities to consolidate vertically and incentivizes prescribing more expensive drugs, all of which contribute to rising costs, according to the CBO.
“Anyone who says 340B is cost-neutral to the taxpayer is not paying attention. As the 340B program grows, so do health care costs,” Cassidy said during the hearing.
Drugmakers have also accused 340 billion providers of serving ineligible patients and doubling down on discounts. Currently, the government lacks sufficient oversight to address these concerns, according to testimony from Michelle Rosenberg, health care director at the U.S. Government Accountability Office.
For example, Rosenberg said the Health Resources and Services Administration, the HHS agency that oversees 340B, does not have enough data to ensure participating hospitals meet eligibility requirements.
HRSA also does not evaluate whether covered entities are complying with rules intended to avoid duplicate discounts, he said.
“Over the years, the program has grown and become more complex. Federal oversight must catch up with this growth and related changes to ensure the program works as Congress intended,” Rosenberg told senators.
During the hearing, Republican and Democratic senators called for reforms, including greater transparency and oversight of 340B.
The efforts are being led by a bipartisan working group formed in March, composed of Senators Jerry Moran, Republican of Kansas; Tammy Baldwin, D-Wis.; Shelley Moore Capito, RW.V.; Tim Kaine, D-Virginia; Markwayne Mullin, R-Okla.; and John Hickenlooper, D-Colo.
Initiatives include greater transparency about how revenue is generated in the program and how it is spent, according to Baldwin. Senators also want more funding for HRSA to conduct audits of covered entities, and some limits on where facilities can claim “secondary sites” that benefit from 340B discounts to ensure they are also in areas that serve vulnerable patients.
Sen. Roger Marshall, R-Kan., pushed for a 340B reform bill to be ready by the end of the year.
“Before we go to Christmas, I hope we have a legislation approval committee, dialed in, and I think we’re very close to what that’s going to look like,” Marshall said. “I think it’s time to stop thinking about it and wondering. We know what to do.”
However, some of his colleagues, including Kaine and Sen. Patty Murray, D-Wash., urged a more cautious approach. The senators noted that any changes to the 340B program will come as providers prepare to weather an influx of uninsured patients due to Republican-backed cuts to Medicaid and a possible expiration of ACA subsidies.
“For some providers, 340B can mean the difference between staying open or closing their doors, and that’s why, in the face of these devastating Republican cuts to our healthcare system, we must ensure the 340B program is sustainable for years to come and can support our safety-net healthcare providers,” Baldwin said.
Others were more adamant that reforms target bad actors in the program. Sen. Tommy Tuberville, R-Alabama, said he did not want changes to be made to the 340B program in his state, arguing that rural hospitals depend on it to survive.
“83 percent of rural hospitals in my state are operating at a loss. If other states want to highlight cash-rich hospital systems, then reform efforts should be directed toward them,” Tuberville said.
Witnesses were quick to point out that they did not support reforms that would undermine the heart of the 340B program.
“What we don’t want to do is take away access to care from communities that really need it,” said Dr. William Feldman, a health policy researcher at the University of California.
However, he said research suggested that around 340 billion facilities locate satellite clinics in affluent areas.
“I think one of the things everyone should think about as they reform the program is how to bring these clinics, these pharmacies that 340B contracts with, to areas that serve more disadvantaged patient populations,” Feldman said.
Congress should crack down on aggressive debt collection practices by 340B entities and should also consider requiring facilities to provide patients with more assistance with out-of-pocket costs, he said.
Some efforts are already underway to reform the 340B program. For example, the Trump administration plans to test a rebate program next year in which drug makers issue rebates to hospitals instead of up-front discounts.
340B reimbursements are deeply unpopular among hospitals. Experts at Thursday’s hearing were also lukewarm to the idea.
“I’m concerned about this model for a couple of reasons,” Feldman said. “Some institutions may not have the cash to make that payment up front, and…this leaves the pharmaceutical industry in control of determining what rebates to provide.”
