Speeches & Floor Statements

Examining Oversight Reports on the 340B Drug Pricing Program

Posted on May 15, 2018

  • The Senate Committee on Health, Education, Labor and Pensions will please come to order.
  • Last Friday, President Trump and Secretary Azar announced a blue print on drug pricing that I think is sweeping, comprehensive, and sophisticated, and appears to me to put patients and taxpayers first.
  • They are beginning to tell us more about what they have in mind and are asking for input from the public about some of their objectives, so it may take some time before we know what the specifics of the proposals are.
  • Many of the proposals will be in the jurisdiction of other committees but some of the more important pieces will be in our jurisdiction, including:    
  • More competition for generic drugs biosimilars, and over-the-counter drugs which this committee has already taken some steps on, such as legislation we approved last month to make it easier to get over the counter drugs to market  by modernizing the outdated monograph system;
  • Examining the relationship of the list price to what the consumer pays; and
  • Policies to prevent drug manufacturers from gaming our current system.
  • Some of these can be done by administration action and others will require legislation, so we will be working with the Administration on a hearing and other ways to learn more.
  • The Administration has started that process – after the president announced this proposal on Friday, Secretary Azar held a bipartisan call for senators on Friday, the Department of Health and Human Services has begun briefing staff, and we will continue to help the Administration make sure staff and members of this committee understand the blue print.

  • But today’s hearing is the second in a series of hearings about the 340B program.

  • This committee is turning our attention to the high cost of health care.
  • We have held three hearings on the cost of prescription drugs, most recently with the National Academies.
  • Like those hearings, today’s hearing is bipartisan which means Senator Murray and I agree on the topic and witnesses.
  • So I hope senators will take advantage of the opportunity to hear from the Government Accountability Office and the Department of Health and Human Services Office of the Inspector General.
  • Today I hope we can determine:
  • What is the purpose of the program?
  • Is it fulfilling that purpose?
  • And, should there be changes in the law so that the program can fulfill the purpose?
  • Senator Murray and I will each have an opening statement, and then I will introduce the witnesses.
  • Then we will hear from the witnesses and senators will each have 5 minutes to ask questions.

  • Introduction:

  • At our first hearing, we heard from hospitals, drug companies, community health centers, and pharmacies.
  • We learned that there is a lack of agreement on these questions:
  • What is the total amount Americans spend on prescription drugs;
  • What percent of that spending is subject to a 340B discount; and
  • How much hospitals and clinics save through 340B discounts and on what do they spend those savings? 
  • This lack of agreement on the amount of money and how the money is spent makes it difficult to properly oversee the program or know how much of the savings hospitals and clinics receive from discounted drug prices are used to reduce the price of drugs and treatments for patients – and how much is spent on other activities.
  • It very well may be that most are using the savings to benefit low-income patients as intended.
  • Or it may be that the other activities meet an important public objective.
  • But it is hard to know that until we have more information.
  • At today’s hearing, we will hear from the Government Accountability Office (GAO) and the Department of Health and Human Services Office of the Inspector General (HHS OIG) who have examined and published a number of oversight reports on the 340B program.
  • We will have a third hearing later this year to hear from the Health Resources and Services Administration (HRSA), the agency overseeing the program, at the request of Senator Kaine.

  • On today’s hearing:

  • The Government Accountability Office and the Department of Health and Human Services Office of the Inspector General are nonpartisan federal watchdogs that issue recommendations on how federal programs could be better run.
  • In 2011, GAO found in that HRSA oversight of the program was “inadequate,” saying, “HRSA’s oversight of the 340B program is inadequate because it primarily relies on covered entities’ and manufacturers’ self-policing – that is participants ensuring their own compliance with program requirements.”
  • In that report, GAO issued four recommendations to improve HRSA’s oversight of the program:
  • One: HRSA should conduct audits of participating hospitals and clinics;
  • Two: HRSA should specify how and when drug companies are allowed to restrict supply of drugs to the 340B program in instances such as a drug shortage;
  • Three: HRSA should specify which patients are eligible for 340B drugs; and
  • Four: HRSA should clarify eligibility requirements for hospitals that are not publicly owned to participate in the program.
  • Since then, HRSA has taken steps to address some of these recommendations.
  • In 2012, HRSA began auditing hospitals and issued guidance on how and when drug companies can restrict distribution of drugs through the program to prevent drug shortages.
  • And in 2014, HRSA drafted regulations to define what a patient is.
  • However, HRSA was sued in 2014 and the courts found that HRSA “lacks the statutory authority to engage in such rulemaking,” limiting what HRSA can do to oversee the program.
  • The Inspector General of HHS has come to similar conclusions as GAO, including:
  • Oversight of the program has been inconsistent, and HRSA lacks authority to adequately oversee the program.
  • To improve oversight of the program, the Inspector General recommended that HRSA clarify which patients are eligible to receive 340B drugs, how hospitals and clinics can use contract pharmacies to dispense 340B drugs, and clarify other requirements on eligibility for hospitals and clinics that are not publicly owned facilities.
  • Another concern raised by the Inspector General is that states need to have more information about the price and discount of drugs in the program to properly reimburse through Medicaid.
  • The IG has recommended that there be more transparency on the price of 340B drugs to ensure states are making accurate payments. 
  • I hear often that hospitals and clinics are using the 340B program to benefit low-income patients or serve another worthy, public objective.
  • But, I would like to hear more about if HRSA’s lack of oversight authority has made it difficult for us have agreement on a common set of data about the 340B program of which to make such determinations.