Thursday’s hearing on the 340B Drug Pricing Program in the U.S. Senate Committee on Health, Education, Labor and Pensions (HELP) was notable for broad areas of bipartisan agreement, including alignment on elements of potential reform of the program, and repeated references to real-world data.
The hearing, “The 340B Program: Examining Its Growth and Impact on Patients,” was led by committee Chairman Sen. Bill Cassidy (R-LA). Earlier this year, Sen. Cassidy was the lead author of a report that found that billions in 340B discounts intended to help low-income patients are instead being captured by large hospital systems, with little evidence that the savings are reaching patients.
The hearing featured three witnesses:
- Michelle Rosenberg, Director, Health Care, U.S. Government Accountability Office (GAO)
- Aditi Sen, Ph.D., Chief, Health Policy Studies Unit, Congressional Budget Office (CBO)
- William B. Feldman, M.D., DPhil, MPH, a physician and health policy researcher, University of California, Los Angeles.
The hearing also followed the September release of a report from the CBO, “Growth in the 340B Drug Pricing Program,” which found that the 340B program has grown rapidly and encourages behaviors that tend to increase federal spending, in large part due to the vertical and horizontal integration of hospitals and off-site clinics.
Does the 340B program increase drug spending?
Much of the discussion in the hearing was driven by research and data about the program. There was significant agreement on the challenges facing – or caused by – the 340B program. CBO’s Dr. Sen noted that “…in our assessment, the body of work provides credible evidence that 340B contributes to higher drug spending.”
Also acknowledged in the hearing was the association between 340B participation and hospital consolidation, a dynamic which makes it hard for local doctors to stay independent. This trend was also observed in research led by Johnson & Johnson in collaboration with coauthors from Columbia University and Claremont McKenna College.
There was bipartisan interest in increased transparency surrounding 340B revenues. Ms. Rosenberg suggested that Congress could “place specifications on how revenues are used” and “have covered entities report how revenues are used.”
How do large hospital systems use the 340B program to profit and expand?
The issue of child sites – satellite locations that extend a hospital’s reach for 340B pricing – came up repeatedly. Witnesses mentioned recent insights on the topic, including a study from the USC Schaeffer Center for Health Policy & Economics and other research.
In response to a question from Chairman Cassidy about child sites, Dr. Feldman noted, “I don’t like seeing that all of the new child sites are being put in more affluent suburbs and not in the areas where disadvantaged populations could utilize their services.”
This testimony is supported by researchers at Columbia University, Johnson & Johnson and Claremont McKenna College, who found that the average 340B child site was located in an area with significantly higher incomes, lower unemployment rates, lower uninsured rates and overall healthier populations than its parent covered entity.
What policies would improve the 340B program?
Dr. Feldman applauded bipartisan 340B reform efforts in the Senate, calling out three specific reforms: “One is increased transparency regarding how revenue is generated by the program and how it is spent. Two is more funding for HRSA audits either via user fees or direct appropriations. Three is placing some limits on child sites and contract pharmacies. For example, ensuring they are located in areas that serve disadvantaged patient populations.”
Sen. Tammy Baldwin, a member of the bipartisan group working on 340B reform, summarized their goals: “Our working group wants to increase transparency and ensure appropriate oversight, as well as work towards a strong patient definition and address contract pharmacies, child sites and duplicate discounts.”
The HELP Committee hearing lays the foundation for bipartisan reforms to bring long-overdue transparency, accountability and appropriate oversight to the 340B Drug Pricing Program.
To learn more about J&J’s positions on reforms to improve the 340B Program, read our issue brief.