Drug Discount Program To Get Senate Oversight Hearing

The drug discount 340 program is getting a hearing from the Senate health committee in an effort to fix and reform it.  Senate health committee Chair Lamar Alexander (R-Tenn.) will hold hearings in early spring. No date has yet been specified.  early spring, but did not specify a date.

The 340B Drug Discount Program is a federal government program created in 1992 that requires drug manufacturers to provide outpatient drugs to eligible health care organizations at significantly reduced prices.


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Drug Discount: Current Legislation

The drug discount 340 program constitutes less than 3% of the more than $450 billion in U.S. annual drug purchases. As it is funded by drug company discounts, not federal dollars, 340B doesn’t cost the government one penny.

Meanwhile, key senators have introduced legislation that scrutinize the drug discount program. Since last year, 340B has pitted hospitals and pharmaceutical companies against one another.

Sen. Chuck Grassley (R-Iowa) released a bill that would require hospitals to rtell HHS both the prices they pay to drug manufacturers for the 340B-discounted drugs as well as all revenues received for the drugs from private insurers, Medicare, Medicaid, the Children’s Health Insurance Program and patients.


Drug Discount: Who Will Control The Program


Senator Grassley noted the 340B law doesn’t require hospitals to report how much charity they offer patients with the money saved with their discounts. This is a criticism lobbed frequently by pharmaceutical companies, which by law have to offer the discount to hospitals in order participate in the Medicaid drug program.

Sen. Bill Cassidy (R-La.), who sits on the Senate health committee, is another vocal critic of the 340B program operations. He currently has legislation on the agenda that would put a moratorium on new 340B hospitals.


Drug Discount: CMS Gets Involved


The CMS’ (Center For Medicaid Services) suddenly applied substantial cuts to Medicare Part B drug reimbursements to 340B hospitals. These came into effect Jan. 1 of this year. The American Hospital Association estimated these cuts at $1.6 billion annually. Hospital groups led by the AHA sued the federal government late last year before the cuts were slated to go into effect, but the judge tossed the claim. Hospitals have appealed this decision.

As Congress moves on the issue, PhRMA continues its lobbying for the legislation. PhRMA says not all 340B hospitals are good candidates for the program s they favor the hospitals.  Indeed, 80% of 340B volume goes to hospitals even though they represent only 9% of the total 340B member dispensers. They also accuse the majority of hospitals of offering low levels of charity care, only 2.2% of their total expenses.



Hospitals are hitting back. For example,, the American Hospital Association released its own statistics that show hospitals in the 340B program in 2015 spent an average of 12.6% of their total expenses, roughly $51.7 billion, on community benefits.

Stay tuned, this will get very interesting.

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