Alexander: 340B Program May Need Improvement to Fulfill Purpose of Helping Low-Income Patients

“Hospitals and clinics use the $6 billion in savings they generate through the 340B program to help offset the money they spend in uncompensated care. On the other hand, we also know there are instances where 340B hospitals and clinics may not be using the savings to help low-income patients afford their medications or to provide care.”

WASHINGTON, March 15, 2018 — At the Senate health committee’s first hearing looking at the 340B Discount Drug Program, Chairman Lamar Alexander (R-Tenn.) today said “I hope we can focus first on the purpose of the 340B program and if it is fulfilling that purpose, and second, should there be changes in the law so that the program can fulfill the purpose?”

“The 340B Drug Pricing Program was created by Congress in 1992 to help qualifying hospitals and clinics that treat low-income patients, by requiring drug manufactures that participate in Medicaid to provide discounts on prescription drugs or treatments to these hospitals and clinics,” Alexander said. “The hospitals and clinics may then provide the drugs at the reduced price to low-income patients or they can sell the drugs at a higher price to patients who have insurance and then keep that money and use it to provide care to low-income patients or for other purposes.”

Alexander continued: “Today there is confusion about the program’s goals and requirements because Congress did not make clear in the 1992 law what the purpose of the program actually is. The closest the law came to defining the purpose is a House of Representatives report accompanying the legislative text, 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.’ This has usually meant helping low-income patients afford their medications and health care, and to ensure that qualifying health centers can provide care to their most vulnerable patients.”

“The Health Resources and Services Administration, the Health and Human Services agency that oversees the program, estimated that hospitals and clinics purchased $12 billion of discounted prescription drugs through the 340B program in 2015. 340B hospitals saved $6 billion in 2015 by buying prescription drugs at a discount. That $6 billion represented about 1.3 percent of the total purchases of prescription drugs in the United States in 2015.”

“In other words, about 1.3 percent of the total amount spent on prescription drugs in the United States is devoted to the hospitals and clinics that qualify for the 340B program. Hospitals will point out that, according to the Department of Health and Human Services, they spent more than $50 billion in 2013 on uncompensated care –that’s service to patients that is not reimbursed. Hospitals and clinics use the $6 billion in savings they generate through the 340B program to help offset the money they spend in uncompensated care. On the other hand, we also know there are instances where 340B hospitals and clinics may not be using the savings to help low-income patients afford their medications or to provide care.”

At the hearing, Alexander concluded: “I hope today we can learn more about the program, and how the program might be improved so hospitals and clinics can continue to provide low-income patients with help to afford their health care.”

Alexander’s full prepared remarks are here.

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