340B Legislation Update
We have more details to share about the drug-industry supported group AIR 340B’s summit last week based on news articles about the event.
Rep. Chris Collins
Rep. Chris Collins (R-N.Y.), who represents Western New York and serves on the Energy & Commerce Health subcommittee that oversees the 340B program, said at the event that he plans to introduce legislation to make major changes to the 340B program in the next month or so, according to several news reports. According to RPM Report, Rep. Collins said he has a “commitment” from the committee’s leadership to consider a bill in hearings over the summer.
Rep. Collins said drug manufacturers are raising prices to cover 340B discounts. RPM Report said he is particularly concerned about hospital acquisitions of private oncology practices. According to news reports, Rep. Collins told summit attendees that his bill would include a statutory patient definition. Regarding patient definition, he said there needs to be “a line in the sand” about who is qualified to receive discounts. His goal for revising the 340B patient definition, according to RPM Report, is to make sure patients “walk into the main building, not the suburban hospital,” for the 340B discount to apply. He said stage one will be hearings with testimony from oncologists and others.
According to press reports, Rep. Collins’ bill would also revise the criteria for hospital eligibility in the program, require hospitals to report how they use their funding similar to the reporting requirements for federal grantees, limit contract pharmacy arrangements, and eliminate duplicate discounts.
The drug industry needs to connect the dots between 340B “abuse” and high drug costs, he said.
Sen. Bill Cassidy
According to Bloomberg/BNA, Sen. Bill Cassidy (R-La.) warned at the event that using 340B profits to buy oncology and other medical practices, rather than passing on savings to low-income patients and payers, raises patients’ out-of-pocket costs and goes against 340B’s goals. He mentioned data from a 2015 GAO report suggesting 12 percent of 340B hospitals are among the least likely to provide charity care as evidence of the need for reform.
According to RPM Report, Sen. Cassidy said it will be “a hard sell” for drug companies to advocate for “something that on the face of it will increase drug company profits.” He counseled focusing arguments for change instead on program abuse that may lead to inappropriate care or higher cost therapies.
According to Inside Health Policy, Sen. Cassidy said some will say 340B is the only leverage hospitals have against high drug prices. He said he has not yet seen Rep. Collins’ bill but will take a look at it. Dr. Cassidy said he is working on his own drug pricing bill and expects 340B changes will be part of his legislation. He said requiring hospitals to share 340B savings with patients and the Medicare program could be beneficial. He said he wanted to preserve the good in the program and deal with its unintended use. He cited what he deemed to be abuses of the program including saying that when he was practicing at a 340B hospital, a cardiologist friend asked him to write a prescription for him for reflux medication, without clarifying that it was to be able to receive the medicine at the hospital’s 340B rate of $1 for a month’s supply.
Sen. Cassidy serves on the HELP Committee that has direct jurisdiction over the 340B program and he is playing a key role in trying to draft a compromise bill in the Senate to repeal and replace the ACA.
Other Speakers
According to Inside Health Policy, Barry Brooks of U.S. Oncology Network (a nationwide network of community oncology practices owned by McKesson Corp.) said a drug manufacturer told him a new drug was priced highly because of 340B discounts. Brooks, who is based at the U.S. Oncology Network affiliate Texas Oncology, has been a long time critic of hospital use of the 340B program. He said 340B discounts are an indirect corporate tax offset with drug price increases.
According to Bloomberg/BNA, Brooks said some see the 340B program as a way to raise revenue and that 340B could collapse without early intervention. Other speakers included representatives from PhRMA, other private oncologists, and researchers.
340B Health
Reporters also reached out to 340B Health for comment. They noted that we released a study from Dobson DaVanzo & Associates finding that 340B disproportionate share hospitals cared for more low-income cancer patients dually eligible for both Medicaid and Medicare than non- 340B hospitals and doctors, 22.8 percent compared with 13.8 percent in non- 340B hospitals and 14 percent in doctors’ offices. They also noted our observation that 340B drug purchases represent only 2.6 percent of the overall prescription drug market.