June 20, 2018

VIDEO: Cassidy Targets Health Providers’ Abuse of 340B Program Intended to Help Patients

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WASHINGTON— U.S. Senator Bill Cassidy, M.D. (R-LA), a member of the Senate Health Education, Labor and Pensions Committee, chaired a hearing examining the U.S. Department of Health and Human Services’ (HHS) 340B drug pricing program, focusing on the need to reform the program to prevent abuse and ensure it actually benefits the low-income patients it is intended to help.

The 340B program requires drug manufacturers to provide discounted drugs to participating hospitals and other providers that serve large numbers of low-income Americans. Providers are still reimbursed at the higher, Medicare and Medicaid rates, and there is no requirement that the positive revenue difference must be passed on to patients. Enrollment in the 340B program has roughly tripled over the past decade, increasing costs in the drug supply chain.

In January, Cassidy introduced legislation to increase accountability in the 340B program and ensure drug discounts are passed on to patients. A recent memo from the Congressional Research Service highlighted multiple opportunities for abuse within the program.

Excerpts of Cassidy’s remarks are transcribed below.


CASSIDY: I do think it’s important to move beyond anecdote, because everyone is quoting articles, quoting hospitals in their district. Of course, a hospital has a vested interest in the program maintaining as it currently is. … For example, there is a February 2016 blog published in the New England Journal of Medicine from the University of Chicago in which the person speaks about how reports suggest that the original program is substantially expanded in recent years to include newly qualified entities, affiliated clinics, certain contract pharmacy arrangements. It is currently so vast that commonly infused or injected drugs and by patients their prices are probably being driven up for all consumers. As pharmaceutical manufacturers face substantial and expanded demand for discounts, they can and do pass the cost of these discounts on to other payers. So, if you have commercial insurance, you’re paying more because of 340B.


CASSIDY: [Noting] an article from the New England Journal of Medicine … in which they find that 340B entities are buying physician practices, they have an over-representation of physicians that infuse drugs, that the cost has been elevated. Importantly, the poor patients, the Medicaid patients, are seen less frequently as a percent of their business than in the non-340B [facilities]. Counterintuitive, but the more you go into business of providing 340B proportionately the fewer Medicaid patients you actually see. And importantly they also said that the financial gains for hospitals have not been associated with clear evidence of expanded care or lower mortality for lower income patients. As a doctor, this means a lot to me. We have raised the cost of care, there is no improvement in mortality outcomes, and indeed the lower-income patient is less likely to be seen.


CASSIDY: 340B, according to academicians, incentivizes hospitals to prescribe more expensive medication and dries up costs for both commercial and for Medicare programs. That’s important, Medicare is going bankrupt in eight years. And we should be aware of anything which is driving up the cost for the federal taxpayer, but also for the patient, as she is paying a higher co-pay. … This is GAO: There is a financial incentive at hospitals participating in the 340B program to prescribe more drugs or more expensive drugs to Medicare beneficiaries. Unnecessary spending has negative implications, not just for the Medicare program, but for the beneficiary who would be financially liable for larger co-payments as a result of receiving more drugs or more expensive drugs. I’ll also say, as a physician, [if] you’re giving more drugs to somebody, you’re more likely to have complications. And if the patient is our primary priority, we should not be over prescribing, because we’re exposing her to a greater potential for complications.