340B Senate Hearing Recap

March 16, 2018

On Thursday, March 15, 2018, the U.S. Senate Health, Education, Labor & Pensions (HELP) Committee held a hearing on the 340B program. While there have been hearings on the 340B program in the House, this is the first Senate committee hearing specifically focused on the program in recent years.

Hearing Synopsis

Overall there was very strong support for the 340B program from the Senators on the HELP Committee. Many began their questioning with stories of the 340B program and how it has allowed covered entities in their states to care and meet the needs of their vulnerable patient populations. Senators who were in support of the 340B program were curious in their questioning to better understand the role of the 340B program, reporting and transparency, and the impacts of proposed legislation.

However, 340B hospitals were criticized by two of the committee’s members, Sen. Bill Cassidy of Louisiana and Sen. Todd Young of Indiana. Sen. Cassidy, who introduced the HELP Act at the beginning of 2018 which would freeze the 340B program and add extensive reporting requirements, claimed that hospitals were abusing the program and not serving the original purpose of the program. Sen. Young focused his questioning on how 340B hospitals currently report how their savings are benefitting their patients.

The committee’s chairman Sen. Lamar Alexander of Tennessee said he does plan to have at least one more hearing on the 340B program.

Our key takeaway from the Senate hearing was the importance of program transparency. The hearing was a prime example of why we believe 340B advocacy efforts are critical to keeping the program safe. We know that taking the step toward 340B advocacy is not always an easy one, but there are tools and resources available to help covered entities get started. One way for covered entities to launch their 340B advocacy efforts is by developing an impact story. An impact story is a tool to help you describe your role as a safety net provider and the impact the 340B program has on meeting your care giving mission. As a tool to help you develop your impact story, PSG has created an impact story template.

Download Impact Story Template |

Hearing Recap

The committee heard testimonies from four witnesses on both sides of the debate:

  • Bruce Siegel, MD, MPH | President and CEO | America’s Essential Hospitals
  • Lori M. Reilly | Executive Vice President, Policy, Research & Membership | PhRMA
  • Sue Veer | President and CEO | Carolina Health Centers
  • Joseph Hill | Director, Government Relations Division | ASHP

The testimonies started off with Dr. Bruce Siegel. Dr. Siegel is the president and CEO of America’s Essential Hospitals which represents 325 hospitals and forms the backbone of the nation’s healthcare safety-net. Their hospitals are diverse, but their mission remains the same “to care for all people regardless of social, financial, or health status.” Siegel stated that it was this precise mission that Congress created the 340B program to achieve. Congress’ intention was explicit and clear when it was created more than 25 years ago, to help covered entities stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services. This need is just as prevalent today as it was then.

America’s Essential Hospitals depend on 340B savings. Their average member hospital provides $61 million in uncompensated care which is more than 8x that of other hospitals. How their hospitals use those savings clearly reflects the congressional goal for 340B, to stretch scarce resources and provide more comprehensive services. Some examples of how they stay true to this mission:

  1. Boston Medical Center – Medication adherence programs for cancer and HIV patients
  2. VCU Health in Richmond, VA – Medical home for the uninsured
  3. Erlanger Health System – Oncology and stroke services for underserved patients
  4. University of Utah – AIDS drugs assistance
  5. East Alabama Medical Center – Treatment for cancer patients
  6. University of Kentucky Healthcare – Home infusion treatment
  7. University of Virginia – Home health and dialysis
  8. Hennepin County Medical Center – Medication therapy management

The committee also heard from Lori Reilly, PhRMA’s Executive Vice President, Policy, Research & Membership. Reilly is PhRMA’s senior lobbyist and started her testimony by stating that PhRMA is “supportive of the 340B program and proud of the discounts [they] provide the Community Health Centers, Ryan White Clinics, and other grantees who are good stewards of the program and are essential to America’s safety net.” However, PhRMA believes that the program in its current state is deeply flawed and in need of reform. Reilly testified that the lack of appropriate oversight of patient definition, hospital eligibility, hospital-purchased outpatient sites (called “child sites”), and contract pharmacies have caused unintended consequences and called on Congress for change.

There was also representation from health centers with the testimony of Sue Veer, the President and CEO of Carolina Health Centers, Inc. Her testimony delved into the unique characteristics of health centers and how the 340B program has been critical in enabling many health centers to start providing their patients with access to affordable medications. Veer ended her testimony “encouraging policymakers to work with health centers to best understand the responsibilities and requirements that are unique to the community health centers and [their patients].”

The last testimony was from Joseph Hill, the Director of the Government Relations Division for the American Society of Health-System Pharmacists (ASHP). ASHP represents pharmacists who serve as patient care providers in acute and ambulatory settings and “are at the forefront of efforts to improve medication use and enhance patient safety.” Hill testified about ASHP’s longstanding history of support for the 340B drug pricing program. “Many of our members serve as patient care providers in hospitals and health systems that are 340B-eligible and have seen, firsthand, the benefits of the program to the patients they serve,” Hill said.

Many senators spoke very highly of the 340B program, participating hospitals, and the services the program allowed covered entities to offer in their communities. Below are some highlights:

  • Maggie Hassan pointed out that they have 13 hospitals in New Hampshire that “rely on the program to stretch their federal dollars so they can provide benefits to their communities. Dartmouth-Hitchcock, for example, is one of the few rural academic medical centers in the country and 340B is vitally important to them and the communities they serve.” Because of the 340B program, Dartmouth- Hitchcock saves about $43 million a year. In 2016, these savings allowed them to provide more than $172 million in community benefits.
  • Tim Kaine shared that there are 22 hospitals in Virginia who participate in the 340B program. He shared one example of Riverside Health System who receives $36 million in discounts each year that allow them to provide improved healthcare access in underserved areas of Virginia.
  • Robert Casey shared that there are a lot of diverse hospitals in Pennsylvania that depend on 340B savings and that he understands it is a critically important program. He also criticized the language in recently proposed legislation that uses charity care as the sole benchmark relative to a hospitals’ 340B savings since charity care is just one type of uncompensated care that covered entities provide.
  • Tammy Baldwin started by saying she has long supported the 340B program as it is critical for 71 participating hospitals in Wisconsin. She also shared a story of a rural hospital pharmacy who was able to use 340B savings to expand a remote dispensing site in Mountain, WI which otherwise does not have a pharmacy at all.

There was also a spotlight on the pharmaceutical industry. Sen. Tina Smith stated that the excessive cost of drugs is the number one thing she hears about in Minnesota and pressed Reilly hard on the million-dollar salaries that drug manufacturers’ CEOs take while drug costs continue to rise.

Sen. Elizabeth Warren also noted that the $6 billion in 340B price discounts given by manufacturers are “a tiny fraction of the billions of dollars they pull down in profits.”

340B hospitals were criticized by two of the committee’s members, Sen. Bill Cassidy of Louisiana and Sen. Todd Young of Indiana. Sen. Cassidy, who introduced the HELP Act at the beginning of 2018 which would freeze the program and add extensive reporting requirements, claimed that hospitals were abusing the program. “There are hospitals which are not taking care of charity patients,” Cassidy said.

Sen. Todd Young criticized how 340B hospitals currently report how their savings are benefitting their patients. When questioning Dr. Siegel on how hospitals report their savings, Young told Dr. Siegel, “It sounds like we’re just taking your word for it… you’re having conversations about 340B usage and the data. We’re taking your word for it,” Young said.

In his closing remarks, the committee’s chairman Sen. Lamar Alexander of Tennessee emphasized that he is a supporter of the 340B program and understands its importance but knows that more oversight is necessary to ensure savings are directly helping patients.

Sen. Alexander urged witnesses to consider more extensive reporting on how 340B savings are being used to help patients. Dr. Siegel agreed that hospitals support and embrace transparency but believe that it should extend to manufacturers as well as providers.

Alexander said he does plan to have at least one more hearing on the 340B program.