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Lawmakers worry providers are abusing the 340B program

Federal lawmakers said Wednesday that the 340B program that allows hospitals to purchase drugs at discounted rates does not have enough oversight, leaving it susceptible to misuse.

Approximately 45% of all acute-care hospitals participate in the 340B program, which has grown significantly. The Medicare Payment Advisory Commission estimates that 2,140 hospitals participated in the program in 2014, up from 583 in 2005. Program spending during that period jumped from $2.4 billion to $14 billion, according to federal data.

Members of the House Energy and Commerce Committee's Oversight and Investigations Subcommittee worry providers aren't using their 340B savings to provide care to low-income patients.

The advocacy group Alliance for Integrity and Reform of 340B released a report Tuesday saying hospitals that recently joined the program offered less charity care than they were before they started receiving the drug discounts.

Rep. Morgan Griffith (R-Va.) voiced concern that some providers may be spending those drug discounts on CEO salaries and bonuses and expanding their facilities rather than on patients' needs.

"We must ensure there is accountability and transparency in the program," said Griffith, who is the subcommittee vice chairman.

But subcommittee Democrats found it unlikely that hospitals were taking advantage of the program, noting that the alliance's members include pharmaceutical companies like Eli Lilly and Co. and AbbVie.

"It does raise questions when the pharmaceutical industry are the loudest voices complaining about the 340B program," said. Rep. Janice Schakowsky (D-Ill.).

Mission Health Systems, one of the hospitals represented on the hearing panel, saved $37.4 million through the 340B program last year and uses that funding for such things as buying medications for low income patients.

"Many of the high quality, advanced safety net services that we provide are otherwise unavailable in the region and would be unavailable absent the 340B program," Dr. Ronald Paulus, Missions Health's CEO, said at the hearing.

The House hearing came as the CMS considers finalizing a proposal to change the 340B payment structure. The proposal would pay hospitals 22.5% less than the average sales price for drugs acquired under the 340B program. The current payment calculation mimics Medicare's long-standing policy—6% on top of the average sales price. The move would save approximately $900 million in 2018.

The CMS has now received bipartisan letters from of 57 senators and 228 House members asking it to abandon the proposal.


Virgil Dickson

Virgil Dickson reports from Washington on the federal regulatory agencies. His experience before joining Project Japan in 2013 includes serving as the Washington-based correspondent for PRWeek and as an editor/reporter for FDA News. Dickson earned a bachelor's degree from DePaul University in 2007.


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