House Energy and Commerce Subcommittee Holds Hearing on 340B Drug Pricing Program and Legislation

Recently, the House of Representatives Energy and Commerce Committee and Subcommittee on Oversight and Investigations held a hearing on the 340B Drug Pricing Program. The hearing, “Oversight of 340B Drug Pricing Program” allowed members to learn about recent trends and developments in the 340B drug pricing program. According to the hearing memo, the 340B Drug Discount Program is “now unambiguously the second-largest government pharmaceutical program, based on net drug spending,” behind Medicare Part D. In 2023, sales for covered outpatient drugs under the program exceeded $124 billion in wholesale acquisition cost dollars with total net rebates exceeding $53 billion.

According to a Milliman report, the average cost per prescription for a patient at a 340B hospital is more than 150% higher for patients with commercial insurance than at a non-340B hospital. Additionally, 340B hospitals tend to be less likely to prescribe biosimilars, instead opting for the more expensive biologics. That preference can lead to higher costs for patients as well.

The hearing was held on the heels of the introduction of the 340B Affording Care for Communities and Ensuring a Strong Safety-Net (340B ACCESS) Act, sponsored by Representatives Larry Bucshon, MD, Earl L. “Buddy” Carter, and Diana Harshbarger. The legislation accounts for input from a range of stakeholders and outlines a path to sustain the federal 340B program, including making 340B a “true safety net program for patients” and ensuring that 340B prescriptions are offered to patients at a discounted rate. Additionally, the legislation would prevent middlemen and for-profit entities from profiting off the 340B program and would establish enforceable rules and enhance federal administration and oversight of the program.

Opening Statements

“It’s important that we preserve patients’ access to important and live-saving drugs. We must explore how the 340B program is working to ensure it aligns with how the program was intended to function,” said Chairs Rodgers and Griffith. “This hearing will give Members an opportunity to hear from industry experts about how the 340B program is working and, if necessary, how it could be improved.”

In his opening statement, Subcommittee Chairman Morgan Griffith called the 340B program a “lifeline for many hospitals, health clinics, community health centers, and many other health care facilities.” However, he noted that there are hospitals that are taking advantage of the system.

Witness Testimony

Anthony DiGiorgio, D.O., MHA, Neurosurgeon at the University of California San Francisco (UCSF) Health, testified as to the “explosive growth” of the 340B program and the negative impact the abuse of the program has had. He concluded by providing potential areas for reform, including increased transparency, better eligibility criteria definitions, and to increase the DSH percentage required for eligibility for participation in the 340B Program for hospitals.

Sue Veer, President and CEO of the Carolina Health Center, spoke to her experience working with Community Health Centers and the impact the 340B program has had on such facilities, including allowing covered entities to “increase access to comprehensive primary and preventive that would otherwise be unfunded and unavailable.” She noted the importance of making a return to Congress’ initial intent when passing the 340B program, stating, “the genesis of the 340B Program was manufacturers reducing voluntary discounts to safety-net providers (who became covered entities) in the wake of the Medicaid drug rebate statute).”

William (Bill) Smith, PhD, Senior Fellow and Director of Pioneer Life Sciences Initiative at the Pioneer Institute, spoke to the myriad stakeholders involved in the 340B program, including patients, providers, and even taxpayers. He noted that “the 340B program impacts more stakeholders in the healthcare system than simply drug companies and hospitals” and that because of the “many adverse impacts upon various stakeholders, it is clear that the 340B program needs reform.” However, he urged Congress to move with caution on reform, noting “we do not need more hospital closures in low-income rural and urban areas,” and suggested that perhaps leading with transparency in the program may help.

Matthew Perry, President and CEO of Genesis Healthcare System, discussed his company’s participation in the 34B Program, including what services Genesis can provide as a result of 340B program participation. He spoke to where 340B program savings went, particularly investing back into patient care and support and reducing health care bills for patients who are otherwise unable to afford them. He addressed why the 340B program has grown – at least in his experience – citing an increase in outpatient care services and the number of pricey lifesaving medications. He concluded by urging lawmakers to “carefully consider how much critical patient care 340B makes possible.”

Other Statements

PhRMA President and CEO Stephen J. Ubl released a statement on the 340B ACCESS ACT, which has been introduced into Congress to establish oversight and transparency into the 340B program. Ubl said, “Over the decades, the 340B program has lost its way and become a piggy bank for many, with large hospitals, PBMs and pharmacy chains siphoning money from the program without using it to improve access to lower cost medicines in their communities. The 340B ACCESS Act would put an end to that, marking a major milestone in the longstanding effort to fix the 340B program so that it works better for patients and true safety-net providers. When we joined forces with the National Association of Community Health Centers over a year ago, our hope was that it would lead to Congress pursuing a comprehensive set of changes to the program – including patient affordability requirements, clarifications around hospital eligibility and enforceable accountability measures. Today, we’re seeing that become a reality, showing the value of stakeholders coming together to solve our nation’s health care problems.”