Bipartisan lawmakers are looking to the Trump administration to boost oversight of a controversial drug discount program while the outlook for legislative fixes this year darkens.
Lawmakers on both sides have been demanding greater transparency of the program, called 340B, as various legislation has stalled so far in Congress amid an intense lobbying war between pharma and hospital groups. So bipartisan lawmakers want the Trump administration to use existing power to clarify the requirements of the program, which President Trump cut by $1.6 billion this year.
While the administration has called on Congress for more authority, the leadership of the relevant committees believe it already isn’t using its full power to oversee 340B. It wants the administration to do a better job of defining what the intent of the program is and the requirements for both participating hospitals and pharmaceutical companies providing the discounts.
The effort is part of a larger debate in Congress on how to improve the program created in the 1990s to help hospitals and clinics serving low-income patients. The program allows hospitals either to provide the discounted drugs at a reduced price to patients or to keep the discount and use savings for other areas of care. The law mandated that drug companies that want their products reimbursed under Medicaid have to provide discounts for drugs to 340B hospitals, which can use the savings to improve care for patients.
To qualify for the program, hospitals have to serve a certain number of low-income patients. Drugmakers provided $6 billion in discounts to 340B hospitals in 2015.
But congressional skepticism of the program has intensified, especially following recent questioning by a federal watchdog over the program’s management.
“There is confusion about the program’s goals and requirements because Congress did not make clear in the 1992 law creating it what the purpose of the program actually is,” said Sen. Lamar Alexander, R-Tenn., at a March hearing of the Senate Health, Education, Labor and Pensions Committee.
Republicans want stricter management of the program because of a lack of guardrails around hospitals’ use of savings.
“Some of these 340B hospitals are extending the program benefit to cosmetic clinics,” said Sen. Bill Cassidy, R-La., at that same March hearing.
Democrats meanwhile want more transparency, but also for drug makers.
“We have heard about transparency as it relates to 340B, but I have to say I think the place where we need the most transparency is drug pricing,” said Sen. Maggie Hassan, D-N.H., at the hearing. “I wish stakeholders … like PhRMA advocated as strongly for transparency in the pricing of their own products as they have advocated for transparency in 340B.”
Alexander and Sen Patty Murray, D-Wash., both signed on to a letter last week to the Health Resources and Services Administration asking to immediately finalize regulations to clarify the requirements of the program for both 340B hospitals and for drug makers. Both hospitals and pharma groups have called for clarity on such requirements. House Energy & Commerce Committee Chairman Rep. Greg Walden, R-Ore., and Rep. Frank Pallone, D-N.J., the top committee Democrat, also signed onto the letter.
Senate HELP has held several hearings this year on 340B.
“Over the course of those hearings, committee members heard testimony indicating that, among other things, HRSA should use its existing authority to implement regulations to better administer the program,” a Senate aide said. “While Congress considers if additional authority is necessary, as HRSA requested at the hearing, HRSA should not wait to use the tools it has now to make the program work better.”
The lawmakers argue that the agency could immediately issue final regulations that clarify 340B requirements. These regulations include establishing a process for resolving disputes between hospitals and drug companies over payments and installing financial penalties for drug companies that overcharge a covered entity for a 340B drug.
Pharmaceutical Research and Manufacturers of America, the drug industry’s top lobbying group, praised the letter from the lawmakers.
“Lack of clear rules and requirements has resulted in a program that no longer resembles what was intended when Congress created it a quarter of a century ago,” the group said in a statement to the Washington Examiner.
PhRMA charged that the program has grown out of control and the benefits of the discounts are not being given to patients.
Since its inception, the number of hospitals participating in the program spiraled from 50 to 2,379 in 2017, according to PhRMA.
Hospital groups counter that 340B is critical for safety net programs and rural hospitals. Groups have been seeking ways to thwart the administration’s proposed cuts, turning to allies in Congress for support.
For instance, a bill from Rep. David McKinley, R-W.Va., to roll back the $1.6 billion in cuts has 199 cosponsors.
Cassidy told the Washington Examiner that HELP committee leadership is interested in boosting transparency but the committee is also working on a slew of other bills on drug and healthcare prices.
Three hospital groups have also challenged the administration’s cut in court. A federal judge dismissed the groups’ lawsuit, calling it premature because the administration has not implemented the payment cut yet.
But some insiders say that hospitals need to do a better job of illustrating who is impacted by the cuts.
“One reality that has seriously impacted the way this debate has played out in Washington, DC, in my personal opinion is that a ton of 340B hospitals are out in Trump country — rural America or places like Appalachia or the Rustbelt that have been in decline for decades — literally focused on just keeping the doors open and serving patients,” said Liz Mair, a Republican strategist for drug pricing policies.
