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Inefficient 340B Payment Program Needs Stability and Oversight, Senate Says

Analysis  |  By Amanda Norris  
   July 05, 2023

Multiple senators recently sent a letter to stakeholders to seek input on improving the 340B drug pricing program.

The senators, who are all members of a 340B bipartisan working group, released a request for information to look for policy solutions that would “ensure the program has stability and oversight to continue to achieve its original intention of serving eligible patients,” according to the letter.

The Health Resources and Services Administration administers the 340B program, and it previously issued guidance that allowed covered entities to dispense drugs through contracted pharmacies in the program. However, the senators noted that the current 340B statute does not clearly address this issue.

“The 340B drug pricing program is not working as effectively as it should,” said Senator Moran said in a press release. “The confusion around its contract pharmacy provision and lack of transparency and congressional oversight is failing the patients the program exists to help.”

In addition, a number of drug manufacturers haven’t offered 340B discounts on their covered outpatient drugs dispensed at contract pharmacies in recent years, according to the letter. The senators said that providers in their states have alerted them to the negative impact this has had on providers who serve their constituents, according to the letter.

The senators also acknowledged that stakeholders have been concerned by the need to strengthen the program’s integrity measures. To address these concerns, the senators are requesting information on ways to improve covered entities’ accountability and ensure transparency according to the letter.

This is just the latest of the 340B payment drama, which has gone back several years.

As finance and revenue cycle leaders know, the 340B program requires drug manufacturers to provide outpatient drugs to eligible healthcare organizations and other covered entities at significantly reduced prices, and these payments are a lifeline for some orginizations.

Robin Damschroder, the CFO for Henry Ford Health, previously shared with HealthLeaders the impact that these payments have on hospitals.

"Henry Ford Health system and a lot of folks rely on 340B discounts and other mechanisms like disproportionate share payments. We're a big teaching institution, so a lot of these special payments that we do in order to teach the healthcare leaders of the future or make sure that we can take care of vulnerable patients are extremely important," Damschroder said.

"So that is an area that we and others are actively—in our advocacy—ensuring that these programs stay intact or evolve to a place that enhances the programs for the people that were trying to care for," said Damschroder.

Cheryl Sadro, the CFO for UC Davis Health, and Tammy Trovatten, the director of government reimbursement for UC Davis Health, also connected with HealthLeaders to discuss the financial issues hospitals and health systems have been dealing with over the course of the pandemic, one key area being 340B payments.  

One of the things we've been watching and will continue to watch through this process is where we go from here with 340B. We're the only level one trauma center in a multicounty area, and between 340B trauma and transplant, we've garnered a large portion of our bottom line,” Sadro said.

The senators’ goal is to ensure that the program has improved stability and integrity and that it continues to enable providers to use federal resources to provide better healthcare, the group says. Stakeholders should submit written responses no later than July 28, 2023.


Amanda Norris is the Director of Content for HealthLeaders.

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