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Walden and Alexander Ask for Input on Modernizing 340B Drug Pricing Program


10.09.20

Washington, D.C. – House Energy and Commerce Committee Republican Leader Greg Walden (R-OR) and Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Lamar Alexander (R-TN) released the following statement calling for input on how to improve the 340B Drug Pricing Program (340B).

“Strong bipartisan support for 340B has spanned the almost three decades since the program was created, but it is clear changes are long overdue. While we hear reports of the program benefiting low-income patients, there remains significant confusion about the program’s requirements and lack of data necessary for effective oversight to maintain the integrity of the program.

“The 340B program has evolved and grown exponentially over the past 15 years, underscoring the need for clarity. For too long, 340B has been governed by guidance and other subregulatory actions that do not carry the weight of law. Ultimately, the Health Resources and Services Administration’s (HRSA) ability to hold all participants accountable, while ensuring adequate oversight and program administration, is limited. At the same time, HRSA must use its existing authorities to the fullest extent to make certain that the 340B program is serving health care providers and patients with integrity. Last year, the Government Accountability Office (GAO) found that HRSA should be doing more to maintain 340B integrity, and historically minimal oversight of the program has impeded a full examination of the extent to which the 340B program is appropriately serving patients.

“For example, when verifying the contract that makes some hospitals eligible for 340B, GAO found that HRSA primarily relies on hospitals’ self-attestations on the existence of the required contracts with state and local governments. Furthermore, HRSA reviewed contract documentation for less than 10 percent of nongovernmental hospitals per year in 2017 and 2018. In addition, these limited reviews did not always include assessments of whether contracts are consistent with the statutory requirement to provide health care services to the 340B-specified low-income population.

“Recently, participating drug manufacturers altered certain business practices to limit contract pharmacy involvement in the program. Contract pharmacies serve an important role in improving access to prescription drugs; however, it is clear that such pharmacies are not referenced in law. We have been following this activity closely and believe contract pharmacies are an important part of the continued discussion around 340B modernization.

“We are calling on all stakeholders to submit ideas on how we can improve the 340B program. Congress, as well as those that participate in the program, must be open to updating 340B so that it best serves our seniors and most vulnerable patients, while also protecting the valuable services offered by health care providers, hospitals, and clinics. Program changes are needed and long overdue, and allowing program participants to continue playing by their own rules leaves the most important 340B stakeholder on the sideline – the patient,” said Walden and Alexander.

Background:

The 340B Drug Pricing Program (340B) was created by Congress in 1992 to “permit covered entities to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” The program requires drug manufacturers that participate in Medicaid to provide discounts on certain prescription drugs or treatments, including treatments for cancer, diabetes, or HIV – for such qualifying entities. 

340B program participation has grown substantially since the program’s inception. For example, since 2005, the number of active hospitals and associated sites participating in 340B has increased by nearly 3,000 percent. In 2005, there were approximately 432 active hospitals and 594 associated sites; in 2020, there are now roughly 2,541 active hospitals and 26,641 associated sites.

From 1996 to 2010, 340B-participating hospitals and clinics that did not have an in-house pharmacy were allowed to contract with one outside pharmacy to make certain patients could access discounted 340B prescriptions. In 2010, the Obama Administration, through guidance, removed this cap and allowed such entities to contract with an unlimited number of outside pharmacies. Since that time, the number of contract pharmacies has spiked from 1,300 at the beginning of 2010 to over 25,000 in 2020.

Reports from the Department of Health and Human Services Office of the Inspector General, the GAOthe National Academies, and the House Energy and Commerce Committee highlight that more program clarity is needed despite the important role 340B plays in our nation’s health care safety-net.

Ranking Member Walden and Chairman Alexander are asking for comments and recommendations to be submitted by October 30th to the following email addresses: 340B@help.senate.gov and 340B@mail.house.gov.

Press Release