On March 15, 2018 the Senate Health, Education, Labor, and Pensions (HELP) Committee held a hearing on the 340B program. In his opening statement, Chairman Lamar Alexander (R-TN) highlighted the expansion of the 340B program over the past five years and stated that Congress needs “a better understanding of its purpose, and why the 340B program exists and how it is being used.” Over the course of the hearing, members of both parties seemed open to measures that would increase transparency regarding how hospitals use the savings they receive from the program, while remaining supportive of the 340B program. Ranking Member Patty Murray (D-WA) stated that “accountability and transparency are important to address concerns about whether entities are using their 340B savings appropriately, and whether pharmaceutical manufacturers are providing discounts fairly. We can, and should, provide accountability in a way that strengthens and preserves this program.” Congress created the 340B program to provide discounts on outpatient drug purchases by hospitals and eligible clinics that serve low-income individuals. A 2017 report from the Government Accountability Office found that the amount of covered entities participating in the 340B program almost doubled between 2013 – 2017.
The committee heard testimony from Bruce Siegel of America’s Essential Hospitals; Lori M. Reilly of the Pharmaceutical Research and Manufacturers of America; Sue Veer of Carolina Health Centers, Inc.; and Joseph M. Hill III of the American Society of Health-System Pharmacists. Chairman Alexander indicated there will be at least one more hearing on 340B this year.
In recent months the U.S. House of Representatives and the U.S. Senate have focused on the 340B program. In the House, Energy and Commerce Committee Chairman Greg Walden (R-OR) released a report critical of some aspects of the program and suggesting changes focused on transparency and accountability of covered entities. The Committee is expected to soon introduce legislation to reform the program. In the Senate Bill Cassidy (R-LA) has introduced the HELP Act, which would place a two year moratorium on new enrollments in the 340B program and would impose additional reporting requirements on covered entities.
The focus on the 340B program coincides with the Trump administration’s reduction in 340B payments contained in the Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs final rule (82 Fed. Reg. 52356, Nov. 13, 2017). Beginning January 1, 2018 covered entities are receiving reimbursements based on the average sale price minus 22.5 percent. Previously, covered entities were reimbursed by Medicare at the average sales price plus 6 percent. A lawsuit filed by the American Hospital Association, the Association of American Medical Colleges, and American’s Essential Hospitals is currently before the U.S. Court of Appeals for the District of Columbia Circuit. Briefing will conclude on April 2 and oral arguments are expected in May.
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