aamc.org does not support this web browser.
  • Washington Highlights

    E&C Health Subcommittee Discusses 340B Drug Pricing Program

    Tannaz Rasouli, Sr. Director, Public Policy & Strategic Outreach
    Len Marquez, Senior Director, Government Relations

    At a March 24 House Energy and Commerce Health Subcommittee hearing with a panel of federal witnesses to discuss the 340B drug pricing program, several subcommittee members expressed the importance of the program in helping hospitals in their communities extend access and services to underserved populations.

    Questions sought to clarify program intent and eligibility, how covered entities use savings, recent oversight activities undertaken by the Health Resources and Services Administration (HRSA), HRSA’s plans to conduct audits of manufacturers and to report ceiling prices, and upcoming guidance anticipated from the agency.

    Health Subcommittee Chair Joe Pitts’ (R-Pa.) opening remarks noted, “This program, designed to stretch scarce federal dollars, is critically important for indigent and low-income patients who may otherwise be unable to access needed drugs or afford treatment.” He also indicated the need for “greater oversight and transparency,” echoing remarks by full committee Chair Fred Upton (R-Mich.) that “It is in the interest of good government to see program integrity strengthened, the program’s operating parameters clarified, and the program’s rules consistently enforced.”

    Subcommittee Ranking Member Gene Green (D-Texas) opened by observing, “As we examine the 340B program and oversight efforts during today's hearing, it’s important to remember that for 23 years, 340B’s mission has been to lower drug cost for safety net providers so they can provide more comprehensive services and reach more individuals. The program enables providers to decide how to best serve their communities [by] obtaining and leveraging savings from manufacturers so more patients can receive more care in their communities.”

    Further clarifying the programmatic intent, Committee Ranking Member Frank Pallone (D-N.J.) stated, “Congress’s intention when this program was created was to help covered entities expand their capacity to serve their patients. Through savings from the drugs purchased at a discounted rate, 340B providers are able to stretch scarce resources to reach more eligible patients and provide more comprehensive health services.”

    He continued, “It’s without a doubt that the resources provided through the 340B program have a direct impact on augmenting patient care throughout the country and will continue to play an integral role in the future by supporting the mission of safety net providers, to serve low-income, uninsured, and underinsured patients.”

    Similar to comments by Rep. Kathy Castor (D-Fla.), Rep. G.K. Butterfield (D-N.C.) described that “340B is critical to the communities that I represent in Eastern North Carolina. And its importance cannot be overstated ... For many North Carolinians, the only way to access the care they need is through 340B.” Regarding potential changes to the program, he stated, “I ask that we proceed with caution to avoid disruption to the patient populations that heavily depend on hospitals for their health care needs.”

    He asked about growth in the number of covered entities, prompting HRSA Deputy Administrator Diana Espinosa to explain that such trends are resulting both from “a decentralization of health care with ... care being provided in more sites,” as well as from a change in how HRSA has accounted for eligible entities, now counting not only the organization itself, but also all its sites.

    She added, “But I should note, since there have been several comments about the growth in 340B, that over the last several years, the 340B sales have remained at about 2 percent of overall pharmaceutical sales. So while the number of entities has increased, the sales – the 340B as a proportion of pharmaceutical sales – has stayed about 2 percent.”

    Rep. John Shimkus (R-Ill.) questioned whether covered entities were spend savings consistent with the program’s intent to support access to care. Debbie Draper, Ph.D., Director of Health Care for the Government Accountability Office (GAO), cited a 2011 GAO report in which interviewed covered entities “all reported using the revenues generated consistent with their mission.” She added, “for example, they used the revenues to provide more comprehensive services in terms of case management services or patient education” and “to expand services to other locations.”

    In response to a similar question from Rep. Renee Ellmers (R-N.C.), Dr. Draper reiterated that the 2011 GAO report found that these safety net providers were using savings to provide “more comprehensive services in terms of … adding additional sites, providing patient care, paying for patients’ copays or helping them get the drugs that are needed.”

    A number of committee members inquired about HRSA’s efforts to report ceiling prices, enabling covered entities to ensure that they are not being overcharged by manufacturers, as recommended by the Health and Human Services Office of the Inspector General (OIG). Espinosa reported that the agency expects a pricing system to be operational later this year and also described efforts to conduct manufacturer audits similar to those it has been carrying out for covered entities.

    HRSA also indicated that the agency’s anticipated omnibus proposed guidance on the program is expected to be released this year, and will address issues such as patient definition, hospital eligibility, and contract pharmacies, among other areas of clarification.