After Years without Review, a Misused and Bloated Federal Drug Discount Program Finally Getting Congressional Review

Guest Post by Tom Kowalski, President of the Texas Healthcare and Bioscience Institute (THBI)

The House Energy & Commerce Committee’s Subcommittee on Health has taken a needed first step in holding its March 24 hearing on the federal 340B drug discount program. It has been 10 years since the last Congressional review of the 340B program, so this hearing was long overdue.

But this renewed Congressional attention on 340B is especially vital as this federal program, while initially well intended, has gone off the rails. Over the years this program has morphed from its original purpose and grown so dramatically that it is in need of real oversight, reform, transparency and accountability.  That is the only way to ensure this program is sustainable and works as originally intended when it was initiated in 1992 – to help vulnerable, uninsured patients gain access to outpatient prescription medicines.

The Office of Inspector General (OIG) and the Government Accountability office (GAO), both of which testified at the hearing, cited a lack of clarity in program guidance and agreed that more oversight is needed to strengthen the integrity of the 340B program. Hearing testimony provided by the OIG and GAO provide more insight into a number of troubling concerns.

We should all be a bit anxious about any government program that is left to operate for decades with little oversight or timely review to ensure it is doing its job.

The committee raised a number of red flag concerns about 340B, including:

• Disproportionate Share Hospitals (DSH) are not required to account for their savings gained from the 340B program to serve low-income and underinsured patients. They are also not required to inform patients of 340B discounts or to pass those discounts on to patients.
• In many cases, hospitals qualifying for 340B provide minimal charity care.
• HRSA (Health Resources and Services Administration), the federal agency whose responsibility is to oversee the 340B program, is hamstrung when it comes to enforcing any binding regulations in order to effectively manage the program.

Congress should continue to take the necessary steps to preserve the 340B program and ensure that it is accountable when it comes to serving those who need help the most – vulnerable and uninsured patients.

Thomas R. Kowalski is President and CEO of the Texas Healthcare and Bioscience Institute (THBI) in Austin, Texas. The Institute is a statewide, public policy research organization whose purpose is to promote medical research, development, and manufacturing in Texas. THBI consists of leading biotechnology, medical device, and pharmaceutical companies, universities, private research institutions, chambers of commerce, and economic development corporations.