The section 340B prescription drug program has flaws and needs change, a report by the House Energy and Commerce Committee has concluded.

The program, which requires pharmaceutical companies to provide discounts on prescription drugs to be dispensed on an outpatient basis to qualified providers that serve large numbers of low-income patients, has been controversial in recent years.  As the number of providers eligible for the program has grown, pharmaceutical companies have claimed that the program is expensive, is being abused, and is responsible for driving up prescription drug costs while providers insist that 340B is a vital tool in helping them serve low-income patients.  Congress, meanwhile, has questioned the program’s growth and sought accountability for how providers use the savings the program generates to serve their low-income patients.

The controversy moved into a new area in the fall when the Centers for Medicare & Medicaid Services adopted a regulation greatly reducing 340B payments to providers – even though the federal government does not pay for the drug discounts – and seeking to move savings elsewhere in the federal budget.  A coalition of providers sued unsuccessfully to delay implementation of the regulation.

Now, the House Energy and Commerce Committee has issued a report on the program.  The following findings are taken directly from the committee’s report:

• Congress did not clearly identify the intent of the program, nor its parameters.
• HRSA lacks sufficient regulatory authority to adequately oversee the program and clarify requirements.
• HRSA has started but still has not completed the process to issue and enforce regulations in the areas in which it has regulatory authority.
• Although HRSA has increased the number of covered entity audits it conducts each year, the audit process still needs improvement.
• The 340B statute does not require covered entities to report program savings or how they are used. As a result, there is a lack of reliable data on how program savings are used, and covered entities may use these savings in a variety of ways.

While asserting strong bipartisan support for the program among committee members, the 79-page report offers the following recommendations (again, taken directly from the report):

• HRSA [the Health Resources and Services Administration] should finalize and begin enforcing regulations in the three areas in which it currently has regulatory authority.

• Congress should give HRSA sufficient regulatory authority and resources to adequately administer and oversee the 340B program.

• Congress should clarify the intent of the 340B program to ensure that HRSA administers and oversees the 340B program in a way that is consistent with that intent.

• Congress, or HRSA where HRSA already has authority to make such changes, should promote transparency in the 340B program, including ensuring that covered entities and other relevant stakeholders have access to ceiling prices, and requiring covered entities to disclose information about annual 340B program savings and/or revenue.

• Congress should establish a mechanism to monitor the level of charity care provided by covered entities.

The committee is expected to pursue legislation implementing its regulations in the near future.

Most private safety-net hospitals qualify to participate in the 340B program, consider it a vital tool in serving their communities, and support the program’s preservation.  NAUH has conveyed its position on the program, and the recent changes in program, in separate letters to the administration and Congress.

Go here to see the full House Energy and Commerce Committee report on the 340B program.