The Senate's health committee chairman, Lamar Alexander (R-TN), on said he'd like to know more about how medical organizations apply the savings they get from the so-called 340Bb drug discount, a program for which federal officials have been trying for years to devise new rules.

The federal 340B Drug Pricing Program requires drug manufacturers to provide discounted drugs to hospitals that treat low-income patients. The idea is that participating facilities would dedicate resources generated from these discounts to expand and improve care to these populations.

"It very well may be that hospitals and clinics are using the savings to benefit low-income patients as intended," Alexander, chairman of the Senate Health, Education, Labor and Pensions (HELP) Committee, said at a hearing."But it is hard to know that until we have more information."

Alexander's questions highlighted a lack of clarity about the discount drug program, which has swelled in recent years. Not even the leader of the Senate's chief health committee knows for certain how the 340B savings flow within the medical system.

Currently, safety-net hospitals and clinics and other participants in the 340B program are not required to reveal this information. Instead, advocates for 340B offer anecdotes, such as those cited at a previous Senate HELP hearing held in March on the program.

UK HealthCare, based in Lexington, Kentucky, uses its savings to maintain dedicated pharmacy staff to help indigent, self-pay, and underinsured patients receive needed medications through copayment assistance and other financial support programs, said Bruce Siegel.

In Alexander's home state, Chattanooga-based Erlanger Health System uses 340B savings to provide trauma, oncology, and stroke services programs to underserved patients, as well as counseling on medication adherence and chronic disease management, Siegel said.

"We have few tools as effective as 340B for countering high drug prices. And we have no tools as cost-effective as 340B for the federal government and taxpayers," Siegel said. "Support to hospitals comes from manufacturer discounts, not taxpayer dollars. In fact, restricting 340B likely would leave state and local governments picking up the tab for uncompensated care, or necessitate further federal investments."

The 340B program started in the 1990s as a workaround to allow drugmakers to continue to offer safety-net hospitals and organizations discount medicines in light of new Medicaid rules. The Affordable Care Act of 2010 altered the terms for participation in the 340B program, triggering a significant expansion.

Different Opinions

There is widespread agreement about a need for new rules for 340B, although opinions differ about what they should do. Sen. Patty Murray of Washington, the ranking Democrat on HELP, and Sen. Elizabeth Warren (D-MA) was among those who called for tougher policing of pharmaceutical companies by the Health Resources and Services Administration (HRSA), which oversees the 340B program.

Research published in recent years in the New England Journal of Medicine and Health Affairs has heightened concerns that the benefits of the 340B program do not always reach patients. It has also been said that the program has unintended consequences on the practice of medicine, such as helping fuel acquisition of physician practices.

Regulatory Setbacks

HRSA developed a proposed omnibus 340B regulation in 2014 but withdrew it because of a legal challenge. HRSA then in 2015 issued proposed omnibus 340B guidance that would have addressed a number of OIG and US Government Accountability Organization (GAO) recommendations, such as clarifying the definition of a patient. HRSA never finalized this guidance, and formally withdrew it in January 2017.

Currently, hospitals, clinics, and other 340B organizations are not required to share drug discounts directly with patients. Some make arrangements to ensure this happens during interactions at outside pharmacies, but the practice is not universal, according to OIG's Maxwell.

As advocates for patients and consumers, they support transparency in the program to ensure that 340B is meeting the needs of patients. However, they cannot support any proposals branded as enhancing 'transparency and oversight' that would have the effect of reducing the number of safety net providers in the program and, in turn, the number of patients served.