August 1, 2013—Sen. Charles Grassley (R-Iowa) sent a letter yesterday to Walgreens requesting detailed information about its participation in the 340B program as a contract pharmacy, including its financial arrangements with covered entities.[ms-protect-content id=”2799″]
In the letter, Senator Grassley says “the intent and design of the [340B] program is to help lower outpatient drug prices for the uninsured. It is not intended to subsidize pharmacies that team up with covered entities to turn a profit.” He asks the company to respond to the following information requests by Aug. 14:
- List all 340B covered entities with which Walgreens has an active contract pharmacy agreement, either indirectly or directly. Include the distance between each participating Walgreens and the 340B covered entity and the type of covered entity (i.e. Critical Access Hospitals, Disproportionate Share Hospitals).
- Summarize all profits generated as a result of participating in the 340B program as a contract pharmacy and break down the revenue by location and participating covered entity.
- Describe the 340B services that Walgreens provides to covered entities and how much they cost.
- For the top 100 340B drugs dispensed, show how much money goes to (1) the participating covered entity; (2) Walgreens; and (3) any supplemental vendor or contractor that assists in managing the relationship between Walgreens and the covered entity (i.e. split billing software vendor).
- How does Walgreens ensure that low-income, uninsured eligible 340B patients get 340B discounted drugs as close to acquisition cost as possible?
- Why should Walgreens, as a for-profit corporation, financially benefit from the 340B program?
- Does Walgreens reinvest money back into underserved communities generated by being a contract pharmacy in the 340B program? If not, why not?
- Provide information about Walgreens’ ability to help 340B covered entities with audits and give a breakdown of any such assistance provided to date.
A Walgreens spokesperson said late yesterday that the company had no comment.
Senator Grassley’s letter says that, according to government statistics, there were more than 7,000 340B contract pharmacies in 2011. Of those, the letter says, Walgreens operates 5,400. Although the letter does not give the source of that latter number, it appears to have come from drug industry consultant Adam Fein, one of 340B’s most outspoken critics.
The letter says that in a February 2012 slide presentation, “Walgreens discusses ways to, ‘generate revenue from [its] 340B patients.'” It also cites a Walgreens’ analyst’s post on his LinkedIn page stating that the company anticipates adding “a minimum of $250 million in incremental revenue over the next 5 years” from its participation in 340B and that Walgreens “…optimizes client’s 340B program, so they can be more profitable while lowering Walgreens liability.”
Safety Net Hospitals for Pharmaceutical Access (SNHPA), which represents hospitals enrolled in 340B, said in a statement that it “appreciates Senator Grassley’s interest in ensuring integrity in contract pharmacy arrangements and shares his desire to ensure that vulnerable patient populations benefit from this important program.”
The group, however, said it is concerned about the way that the letter to Walgreens describes the program. “The program’s purpose is to reduce outpatient drug costs for health care providers that serve high volumes of poor, uninsured, and underinsured patients so these providers can stretch scare federal resources, serve more patients, and improve services,” SNHPA said. “It is not intended solely to reduce drug prices to the uninsured, although that is one of the important ways the 340B program is often used.”
In addition, SNHPA said the 340B program does not increase the federal government’s financial liability under Medicare, as 340B hospitals are paid no more than non-340B hospitals for pharmaceuticals. “Purchasing drugs at lower costs allows 340B hospitals and other covered entities to stretch their limited resources and depend less on taxpayer support,” SNHPA said. “[If] 340B providers were unable to access savings by using discounted drugs for insured patients, there would be little incentive to participate in the program.”
SNHPA said it “supports 340B multiple contract pharmacy arrangements because they improve patient access to affordable medications.”
“Nonetheless, SNHPA believes the multiple contract pharmacy model should be evaluated to ensure it is meeting the purpose of helping low-income and other vulnerable patient populations,” the group said.[/ms-protect-content]