May 22, 2014—Reps. Renee Ellmers (R-N.C.), Tim Murphy (R-Pa.), and Bill Cassidy (R-La.) voiced concerns about the 340B program during a House Energy and Commerce Health Subcommittee hearing yesterday on Medicare payment reform. [ms-protect-content id=”2799″]
The three lawmakers’ observations and questions about 340B echoed positions taken by the drug industry and private cancer physicians that hospitals are profiting from 340B without passing along savings to disadvantaged patients and that 340B is driving up the cost of cancer care to patients and driving private oncology practices out of business.
Reps. Ellmers, Murphy, and Cassidy all put their questions about 340B to Mark Miller, the executive director of the Medicare Payment Advisory Commission, who was called to testify about Medicare fee-for-service payment policy across sites of care. Mr. Miller appeared surprised at being asked about 340B and he confessed that his knowledge of the subject was not deep.
Rep. Ellmers said that “about a year ago,” Office of Pharmacy Affairs Director Cmdr. Krista Pedley “stated that she was not sure where” 340B savings were going. “I think that is a significant statement because if the government doesn’t know, I mean, shouldn’t the government know where these dollars are going and how they are being utilized?”
“If a hospital is a 340B hospital, are those dollars truly going where they are supposed to go?” she continued. “And there again, and certainly not ever thinking that a hospital would be playing games, but I think if there is a wide and a very gray area there, I think that the hospital would utilize them as they need to. And I think that might be something that we need to work on into the future.”
“One of the concerns that I frequently hear about the 340B program—first of all, it’s a great program and I support it strongly in many instances—but we also hear some are claiming there’s some abuses of that program where hospitals—well, some centers—will purchase drugs at discount but then they’ll sell them at the mark up again and get this money,” Rep. Murphy said.
Rep. Cassidy prefaced his remark about 340B by referring to a recent report that repeated a 2012 study finding that hospitals have higher outpatient drug administration costs than physician offices, due to higher costs incurred by hospitals and overheads related to their delivery of care. Drugmakers and private cancer clinics argue that such findings support their argument that the 340B program is causing a rise in cancer patients’ treatment costs.
“In the last few weeks, a report … as well as other things shows that there is a different cost for Herceptin at different sites of service,” Rep. Cassidy said. “That if you have a 340B hospital oncology based program, that the delta between what they are charging and paying is such that it creates a competitive advantage relative to community oncological services.”
Rep. Cassidy proposed legislation to curb drug shortages in 2012 that would have exempted the vast majority of generic injectable drugs from 340B discounts. He also has co-written letters to 340B hospitals questioning their use of the program. Also, in 2012, he and Rep. Joe Pitts (R-Pa.) sent a letter to HRSA Administrator Mary Wakefield stating that that 340B needs a new patient definition that “that ensures the program’s eligibility is for those truly in need and curbs any misuse of the program.” Rep. Pitts chairs the subcommittee that held yesterday’s hearing. Recently, the group Citizens Against Government Waste quoted him on its website saying that recent government reports “raise important questions about the degree to which the 340B program may be fully accomplishing its core mission of helping the uninsured access prescription drugs.”
During an Energy and Commerce health subcommittee hearing on drug shortages in February, Rep. Ellmers expressed concern that 340B discounts might be discouraging drug manufacturers from remaining in the generic sterile injectable market and continuing investments in production facilities. The “explosion of the 340B discounts is reducing margins for generic manufacturers” and “pushing them to stop producing low-cost generic injectables,” she added.
During its May 21 hearing, the committee also heard testimony from Dr. Reginald Coopwood, the president and CEO of Regional One Health, a safety-net hospital in Memphis, Tenn.
“Some people have incorrectly claimed that [340B] … is a main driver of consolidation in the oncology field,” he said, speaking on behalf of the American Hospital Association. “Larger market forces have influenced independent oncology practices to merge with their community hospitals. Hospitals are strengthening ties to each other and physicians in an effort to respond to new global and fixed payment methodologies, as well as incentives for improved quality and efficiency, implementation of electronic health records and care that is more coordinated across the continuum.”
“The 340B program is a vital part of the nation’s safety net, gives patients better access to drugs they need for their care, and helps hospitals enhance care capabilities by stretching scarce federal resources,” he added. “As drug prices continue to rise, this program becomes even more critical to vulnerable patients and communities.” [/ms-protect-content]