340B Complaints Are Gaining National Traction

A recent report from the Senate Health, Education, Labor, and Pensions (HELP) Committee, spearheaded by U.S. Senator Bill Cassidy (R-LA), chairman of the committee, examines the areas of the federal 340B program that need reform.

The program is designed to provide affordable care to underserved communities by providing hospitals with drug discounts and providing healthcare savings to patients. However, Chairman Cassidy’s report echoes national concerns about the lack of transparency, accountability, and oversight in the program. 

The hospitals studied—Bon Secours Mercy Health and Cleveland Clinic—generated millions of dollars in revenue thanks to the 340B program but failed to pass these savings onto their patients. Their executives even stated that they believe the program was not intended to pass savings directly to patients. 

Contract pharmacies and third-party administrators like CVS Health and Walgreens charge large fees, diverting revenue that is supposed to help patients. And, while drug manufacturers try to implement guardrails on the covered entities, they find it difficult to hold the entities accountable and keep the program’s integrity. 

The program as it exists now lacks accountability and transparency, but Chairman Cassidy suggests reforms that would ensure this program better serves the patients it was meant to help.

Senator Cassidy’s proposed reforms include: 

• Requiring covered entities to provide detailed annual reporting on how 340B revenue is used to ensure direct savings for patients, providing a more transparent link between program savings and patient benefit. 

• Addressing potential logistical challenges caused by increased administrative complexity, leading to burdens that may impede patient benefit from the program. 

• Investigating the types of financial benefits contract pharmacies and third-party administrators receive for administering the 340B program to ensure that increasing fees do not disadvantage covered entities and patients. 

• Require transparency and data reporting for entities supporting participants in the 340B Program (i.e., contract pharmacies and third-party administrators). 

• Provide clear guidelines to ensure that manufacturer discounts actually benefit 340B-eligible patients, including examining legislative changes to the definition of eligible patient and contract pharmacies’ use of the inventory replenishment model.

Chairman Cassidy’s findings illustrate the larger pattern of discontent surrounding the 340B program. The report brings to light the exploitation that fuels the 340B program, but the reforms suggest a brighter future of the program that finally prioritizes patients over profits. Read more about the report and its findings here.