On Thursday, October 23rd, the U.S. Senate Committee on Health, Education, Labor, and Pensions (HELP) conducted a hearing titled “The 340B Program: Examining Its Growth and Impact on Patients.” The 340B Program allows eligible covered entities, such as hospitals, to buy prescription drugs at lower costs and stretch scarce resources. Committee Chair Senator Bill Cassidy (R-LA) called the 340B program “well-intentioned,” but argued its expansion is increasing health care costs through perverse financial incentives. Sen. Roger Marshall (R-KS) agreed, saying that the majority of 340B savings are used by “large, monopolistic hospital systems that exploit the system.” While we don’t expect any federal 340B legislation to pass this year, there is a growing desire among federal lawmakers to add more reporting requirements (e.g., how savings are used and drug acquisition costs).   

Who were the witnesses? 

  • Ms. Michelle Rosenberg: Health Care Director for the U.S. Government Accountability Office (GAO) 

Key Remarks: 

Senators questioned witnesses on whether the 340B program really helps patients with limited resources, or if instead it increases costs by encouraging consolidation or the prescription of more expensive medication options. Dr. Aditi Sen, a leader at the Congressional Budget Office, answered that while 340B can allow enrollees to purchase more affordable drugs, 340B entities can generate revenue from the program.  

Much of Dr. Sen’s testimony reiterated the CBO’s recent report analyzing the growth of the 340B program. The report found:  

  • About a third of the increase in spending over ten years is because prescription drug spending has grown. Other factors were more entities becoming eligible either through vertical integration or expanded eligibility rules.  
  • The 340B program “encourages behaviors” that tend to increase federal spending, like prescribing higher-priced drugs. (The report didn’t conclude that the 340B program increases federal spending).  
  • If 340B funds are used to open new clinics or provide more services, Medicare reimbursement for those added services can also increase federal spending. (Note that this is the statutory intent of program, using the savings to increase access to care and reach more patients). 

Dr. Feldman proposed ways to improve the 340B program, such as increasing transparency about how revenue is generated and spent, funding more HRSA audits, and limiting child sites and contract pharmacies. He also noted that reforming the 340B program would not automatically reduce drug prices, and any serious discussion about 340B should also include talks on how to lower drug prices in the country.  

Supporters of the 340B program also weighed in. Senator Time Kaine (D-VA) cited a report by the American Hospital Association (AHA) showing that 340B hospitals provided $100 billion annually in uncompensated care and community benefits in 2022. These include mental health services, chronic disease management, and transportation for patients without access to care. Senator Tommy Tuberville (R-AL) also defended the program and argued for its expansion, not its reform. “You can’t go towards people that are losing money already. Not towards states like mine that rely on 340B discounts for survival,” stated the Senator. Following the hearing, Tuberville issued a press release emphasizing that any reforms should target financially stable hospital systems rather than rural hospitals that rely on the program to keep their doors open. Before the hearing, the AHA issued a statement of support, emphasizing that 340B enables eligible hospitals to maintain, improve and expand access to essential services and medications for their patients and communities, especially in rural areas. 

 

AHPA extends our gratitude to our emerging colleague, Christina Luke, guest author of this article. 
Christina is a graduate student in the Master of Public Policy program at Duke University.