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U.S. Senate Committee Discusses Oversight of 340B Drug Discount Program

June 19, 2018

During a hearing before the U.S. Senate Health, Education, Labor & Pensions (HELP) Committee, the federal agency in charge of the 340B Drug Discount Program outlined how the program works and provided an overview of steps that have been taken to strengthen oversight.

The HELP Committee heard testimony from Captain Krista Pedley, Director of the Office of Pharmacy Affairs in the Health Resources and Services Administration (HRSA), regarding the administration of the 340B program.

The HELP Committee has held two previous hearings on the 340B program—a March hearing that featured testimony from advocates representing safety net hospitals, community health centers, health system pharmacists and the drug industry, and a May hearing highlighting conclusions and recommendations laid out in oversight reports.

HRSA administers the program consistent with the understanding that “the 340B program is intended to substantially reduce the cost of covered outpatient drugs to 340B-participating eligible entities, known as covered entities, in order to stretch scarce federal resources.”

Specifically, Congress created the program during 1992 with the stated intent to “Permit covered entities to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.”

When asked what policy recommendations HRSA may embrace relative to the program, Captain Pedley reiterated, “I think it is important that entities are using the savings in alignment with the intent of the statute. That they are stretching their scarce resources as far as possible to provide more care to more patients and what that looks like for them at their entity.”

U.S. Senator Bob Casey (D, PA) participated in the hearing and focused his questions around the policy conversation about eligibility for the 340B program. Presently, hospitals that care for large numbers of uninsured and low-income patients, rural hospitals, and hospitals offering vital services to cancer patients and children have the ability to purchase outpatient drugs from drug companies at discounted prices.

Senator Casey expressed concern with policy proposals that would determine eligibility based exclusively on the charity care provided. The Senator expressed recognition that different hospitals serve different patient populations—including uninsured, underinsured, seniors—in different proportions, and the qualifications for eligibility for the 340B program should appreciate the relative uncompensated care burden of different institutions.

HAP has applauded the introduction of new legislation, H.R. 6071, the Stretching Entity Resources for Vulnerable (SERV) Communities Act, which makes important enhancements that strengthen the 340B program. Importantly, the legislation:

  • Reinforces the importance of the 340B program in helping hospitals balance the increasing burden of ever-increasing drug costs
  • Safeguards the program’s long-term sustainability
  • Promotes program integrity by enhancing transparency and accountability without placing onerous hardships on hospitals providing care to vulnerable patient populations

For more information, contact Laura Stevens Kent, HAP’s vice president, federal advocacy, or Jolene Calla, HAP’s vice president, health care finance and insurance.

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