Senator Alexander Pushes for Better Data and Transparency of the Federal 340B Drug Pricing Program



Senator Alexander Pushes for Better Data and Transparency of the Federal 340B Drug Pricing Program

Today, United States Senator Lamar Alexander (R-Tenn.) - chairman of the Senate's health committee - pushed for better data and transparency of the federal 340B Drug Pricing Program to ensure it's fulfilling its purpose to help hospitals care for low-income patients.

You can watch video of their exchange here, and excerpts are below.

Alexander questioned Dr. Bruce Siegel, president and CEO of America's Essential Hospitals, about the oversight of the federal program.

Alexander: Do you think it's reasonable, Dr. Siegel, to explore legislation if necessary that would ask hospitals and clinics who receive 340B discounts to tell us what they're using the money for?

Dr. Siegel: I would be concerned about legislation that only singles out hospitals and clinics rather than the full range of the program, including our partners in the drug manufacturing industry. I would be concerned about legislation that would serve to intentionally or unintentionally begin to restrict the program.

Alexander: I think you're passing the buck. That's not a very good answer to me and you're talking to somebody who's very sympathetic to you. I mean, why should I not want to know why discounted programs, that benefit hospitals and clinics, what the money is going for? I can ask the pharmaceutical companies all the questions I want to ask them. And I can ask the pharmacists all the questions I want to ask them. And I can ask other people questions too, but I can ask you questions as well. So, why should I not know that? And other senators, especially those who are sympathetic to what you're doing.

Dr. Siegel: I support transparency. We think we embrace it. We want to make sure any transparency doesn't some way restrict the program which we care deeply -

Alexander: Well, first, we'd like to know what you're spending the money for. Then, we can decide if there's any rational for restricting what you're spending the money for. I mean the hospital heads I've talked to very vehemently say, "We're using the money to help people, and we lose a lot more in uncompensated care." Well if that's true, that's a good story to tell, but if you come up here and say, 'Well, we can't tell you because we know, and we don't really want to tell you unless you ask everybody else a whole bunch of questions," that's not a very good answer for me. So, what I would appreciate asking you in follow up questions, is if you could consider, please - both for the hospitals and for the clinics - giving me whatever information you think is already available about how much money -- how much of the savings, how much of the discount -- goes for something other than reducing the price of the specific prescription when the patient shows up at the hospital or clinic. How much is that? And then the second question would be, what are the uses of the money that doesn't go for the specific prescription to the extent you know what it is? And Mrs. Reilly, I'd like to have a good clear understanding of what the size of the discount is, and Dr. Siegel, if you would like to give your version of that too, I'd welcome it so that I could be able to operate [on an understanding] that it's one percent or two percent or eight percent or four percent of the total revenues of prescription drugs.

Background

The 340B Drug Pricing Program was created by Congress in 1992 to help qualifying hospitals and clinics that treat low-income patients by requiring drug manufacturers that participate in Medicaid to provide discounts on prescription drugs or treatments to these hospitals and clinics. The hospitals and clinics may then provide the drugs at the reduced price to low-income patients or they can sell the drugs at a higher price to patients who have insurance and then keep that money and use it to provide care to low-income patients or for other purposes.


Alexander: 340B Program May Need Improvement to Fulfill Purpose of Helping Low-Income Patients

Says there is confusion about the program's goals and requirements because Congress did not make the program's purpose clear

"Hospitals and clinics use the $6 billion in savings they generate through the 340B program to help offset the money they spend in uncompensated care. On the other hand, we also know there are instances where 340B hospitals and clinics may not be using the savings to help low-income patients afford their medications or to provide care."

WASHINGTON, March 15, 2018 -- At the Senate health committee's first hearing looking at the 340B Discount Drug Program, Chairman Lamar Alexander (R-Tenn.) today said "I hope we can focus first on the purpose of the 340B program and if it is fulfilling that purpose, and second, should there be changes in the law so that the program can fulfill the purpose?"

"The 340B Drug Pricing Program was created by Congress in 1992 to help qualifying hospitals and clinics that treat low-income patients, by requiring drug manufactures that participate in Medicaid to provide discounts on prescription drugs or treatments to these hospitals and clinics," Alexander said. "The hospitals and clinics may then provide the drugs at the reduced price to low-income patients or they can sell the drugs at a higher price to patients who have insurance and then keep that money and use it to provide care to low-income patients or for other purposes."

Alexander continued: "Today there is confusion about the program's goals and requirements because Congress did not make clear in the 1992 law what the purpose of the program actually is. The closest the law came to defining the purpose is a House of Representatives report accompanying the legislative text, which says the program was created to 'Permit covered entities to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.' This has usually meant helping low-income patients afford their medications and health care, and to ensure that qualifying health centers can provide care to their most vulnerable patients."

"The Health Resources and Services Administration, the Health and Human Services agency that oversees the program, estimated that hospitals and clinics purchased $12 billion of discounted prescription drugs through the 340B program in 2015. 340B hospitals saved $6 billion in 2015 by buying prescription drugs at a discount. That $6 billion represented about 1.3 percent of the total purchases of prescription drugs in the United States in 2015."

"In other words, about 1.3 percent of the total amount spent on prescription drugs in the United States is devoted to the hospitals and clinics that qualify for the 340B program. Hospitals will point out that, according to the Department of Health and Human Services, they spent more than $50 billion in 2013 on uncompensated care -that's service to patients that is not reimbursed. Hospitals and clinics use the $6 billion in savings they generate through the 340B program to help offset the money they spend in uncompensated care. On the other hand, we also know there are instances where 340B hospitals and clinics may not be using the savings to help low-income patients afford their medications or to provide care."

At the hearing, Alexander concluded: "I hope today we can learn more about the program, and how the program might be improved so hospitals and clinics can continue to provide low-income patients with help to afford their health care."

Alexander's full prepared remarks are here.