340B Health Statement on House E&C Chairmen’s Letter to HRSA on 340B Program
June 1, 2017—340B Health understands that the chairman of the House Energy & Commerce Committee and the chairmen of its Health and Oversight subcommittees sent a letter to the Health Resources and Services Administration late today requesting documents related to HRSA’s oversight of the 340B drug discount program and expressing concerns about how providers use their savings.
340B Health, which represents more than 1,300 hospitals and health systems in the program, supports 340B program integrity and oversight. We welcome balanced congressional oversight of all stakeholders – healthcare providers and drug manufacturers.
Existing federal reporting requirements show the value that 340B hospitals bring to low-income and rural patients. Hospitals are among the most transparent of all organizations. They have to report their costs and charges to the Department of Health and Human Services. They likewise must report various categories of revenue spent to serve low-income patients and communities at large to the Internal Revenue Service. All this information is publicly available. Those data show that 340B disproportionate share hospitals are responsible for 60 percent of the uncompensated care in this country even though they make up only 36 percent of all hospitals. In addition, survey after survey shows that 340B hospitals use their savings to provide vital healthcare services to their low-income and rural patients.
According to HRSA, total 340B sales are about 2.8 percent of total U.S. prescription drug spending. The impact on drug manufacturers is much smaller. Hospitals and other healthcare providers pay drug companies about $6 billion less for covered outpatient drugs than they otherwise would pay. While $6 billion may not be a significant percentage of total drug spending, it is a critical lifeline for safety net hospitals. 340B DSH hospitals spent $23.7 billion on uncompensated care in 2014 and billions more in specialized services in low-income communities.
The 340B program gives hospitals relief from high drug prices. Hospitals rely on the savings to fund critical programs for their low-income, Medicaid, uninsured, and underinsured patient populations. 340B hospitals continue to treat more low-income cancer patients than non-340B providers. They serve more low-income patients and provide more uncompensated care than non-340B hospitals. They provide more vital but money-losing services that are critical to low-income patients like labor and delivery, trauma care, and HIV/AIDS services. 340B hospitals also serve more Medicare Part B patients who are disabled, dually eligible for Medicare and Medicaid, or are a racial or ethnic minority. For examples of hospitals use their 340B savings, see http://www.340bhealth.org/files/Savings_Survey_Report.pdf.
There has been extensive additional oversight of 340B hospitals and other providers in recent years. HRSA has completed 644 covered entity audits since fiscal year 2012. It plans to conduct 200 by the end of this fiscal year and 200 more in FY 2018. All of the final results, including status of corrective action, are available on HRSA’s website.
A duplicate discount occurs when a drug company provides a 340B discount on a drug to a provider and pays a rebate on the same drug to Medicaid. It does not mean that a provider receives two discounts on the same drug.
It’s important to note that a duplicate discount finding in a HRSA audit does not mean that a duplicate discount actually occurred. The finding could simply indicate there was an inconsistency in how a provider’s information was listed in HRSA’s 340B database. It does not mean that the state would have relied on the information, as many states do not use HRSA’s database and have their own mechanisms for preventing duplicate discounts.
340B Health is confident our members hospitals are committed to program integrity are doing their utmost to run a compliant program.
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Contact Tom Mirga at tom.mirga@340bhealth.org or 202-552-5853.