Speeches & Floor Statements

Effective Administration of the 340B Drug Pricing Program

Posted on June 19, 2018

At Methodist Hospital in downtown Memphis, five employees working as “community navigators” go to events in Memphis to give local residents preventative cancer tests and refer them to the Methodist cancer treatment center if necessary. 

Saint Thomas Health in Nashville operates four Dispensary of Hope pharmacy sites across the state of Tennessee, providing low-income, uninsured patients with free or low-cost prescription drugs.

And the Erlanger Health System in Chattanooga delivers prescription drugs at no cost to low-income patients at their homes, to ensure they are receiving and taking their medications.

Methodist, Saint Thomas, and Erlanger are all able to provide these services because of the money they save by participating in the 340B Drug Pricing Program, which requires drug manufacturers that participate in Medicaid to provide discounts on prescriptions drugs to qualifying hospitals and clinics.

Some of the time, the 340B discount is passed directly to the patient as a lower priced drug.

Other times, the hospital or clinic uses the savings to provide other services to patients like the programs Methodist, Saint Thomas, and Erlanger run.

In other words, the savings are used in many different ways.

Arguably, all these uses and others fit in the broad language Congress wrote when it created the 340B program in 1992, 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.”

But, as we learned at our two previous hearings on the program, there is no consistent data that shows how hospitals and clinics are spending the money they save through the 340B Program.

Data is necessary to demonstrate the value of the 340B Program, and Congress cannot evaluate the program, conduct oversight, or consider changes to improve the program without more information.

There has been a lot of bipartisan interest led by Senator Kaine and others on this Committee to hear from the Health Resources and Services Administration, which oversees the 340B Program, and today’s hearing is an opportunity to hear from HRSA on whether they need more authority to collect data and properly oversee the program.

At our previous hearings, we have heard that the reason we don’t have much data is because HRSA may not have the authority to actually collect data and conduct oversight over the program.

We heard explicitly from two government watchdogs – the Government Accountability Office and the Office of the Inspector General at the Department of Health and Human Services – at our last hearing that HRSA needs more authority to properly oversee the 340B Program.

Right now, HRSA has clear authority to determine if hospitals, clinics, and drug companies are eligible to participate in the program.

However, we heard that is unclear if HRSA has the statutory authority to oversee other aspects of the 340B Program, for example defining what patients may benefit from the 340B Program.

Today I would like to hear directly from the agency in charge of the 340B Program:

What data is being collected, and what data is missing?

For example, according to HRSA itself, the agency only has data on about 90 percent of drugs sold through the 340B Program.

What oversight is being conducted on the 340B Program? And are these oversight activities effective?

For example, HRSA currently conducts audits to determine hospital and clinic eligibility.  But we have heard these audits are inconsistent.

One Tennessee hospital shared with me that they were asked to provide information during an audit that was based on draft guidance that was never made final.

To satisfy the unexpected request, the hospital was forced to do additional work at additional expense.

Does HRSA need more authority to collect data or provide more oversight? And is HRSA using its existing authority properly?

As I mentioned, we heard at our last hearing that HRSA does not have “broad rulemaking authority” over the 340B program.

On the other hand, HRSA may not be using their clear, existing authority.

For example, earlier this month, HRSA delayed – for the fifth time – a rule to ensure drug companies are properly participating in the 340B Program.

Why isn’t HRSA using this existing authority to ensure drug companies are participating properly in the 340B Program?

Congress can’t make the 340B Program work better for patients and hospitals if we don’t have accurate and complete information about how the program works.

I look forward to hearing from our witness with the Health Resources and Services Administration today, and our other committee members about what Congress can do to evaluate the 340B Program, measure the program’s performance, and ensure that the agency responsible for the program is conducting proper oversight.