Altoona Times

U.S. Rep. John Joyce (R-PA-13) said in a hearing today that the federal 340b’s growth has created “misaligned incentives” that are driving up patient costs. 

“The 340b program has grown massively since its enactment, growing almost 130% in the last five years alone and is second only to Medicare Part D,” said Joyce in a U.S. House Energy and Commerce Oversight and Investigations Subcommittee Hearing on the federal 340b drug discount program.

“This growth has created misaligned incentives across the entire health care system, leading to further consolidation that drives up prices for every patient,” said Joyce.

Joyce has represented Pennsylvania's 13th Congressional District since 2019 Before entering politics, he was a dermatologist with a private practice in Altoona. He earned his medical degree from Temple University School of Medicine. Joyce serves on the House Committee on Energy and Commerce, specifically within the Subcommittees on Health and Communications and Technology. 

Established in 1992, the 340b program enables eligible hospitals and healthcare organizations to purchase outpatient medications at significantly discounted prices.

Hospitals participating in the 340B program can use the savings to fund for essential services and programs, such as free or low-cost medication assistance, expanded access to healthcare, and community outreach initiatives.

Participating hospitals, however, “often extend their 340B discounts to clinics in well-off communities, where they can charge privately insured patients more than those on Medicaid,” reported the Wall Street Journal.

“In some cases, the program appears to be bolstering profits in well-off areas more than it is underwriting services in less-privileged neighborhoods,” said the Journal article.

During the hearing, Joyce asked Dr. Anthony DiGiorgio, a neurosurgeon and senior affiliated scholar at the Mercatus Center at George Mason University, if DiGiorgio thought that requiring covered entities to spend 340b savings directly on patients would "curb these abuses" in the program.

"I think it would it would have some effect," said DiGiorgio. "I think there's there's going to be plenty of room for creative accounting around that."

DiGiorgio told Show-Me State Times in April that patients served by a hospital participating in the federal 340b drug program should “absolutely” be concerned the drug savings aren’t being passed along to them.

"Patients who have a drug copay are charged based on the list price of the drug, not the discount that the hospital acquires it for,”said DiGiorgio. “Because the discount is mandatory, many drugs come out with higher list prices than they normally would, but patients pay that copay at the higher list price,” he said. 

“Patients are actually paying more than they otherwise would if the 340b program didn't exist," he said. “The hospitals often buy these drugs at the 340b discount and then resell them to Medicare and private insurance through independent pharmacies." 

“They charge Medicare and private insurance much more than the discounted price, reaping huge revenues," said DiGiorgio.

He said the program “makes no provisions requiring that the discounts be passed on to patients,” and there are also “no provisions that those revenues go back to charitable care, either.”

“The hospital can use that money for whatever it wants," he said. “This potential for 340b abuse has led hospitals to contract with pharmacies in wealthy areas and acquire independent clinics in these wealthy areas as well.”

U.S. Reps. Larry Bucshon, MD (R-IN-08), Buddy Carter (R-GA-01), and Diana Harshbarger (R-TN-01) last week introduced the "340B Affording Care for Communities and Ensuring a Strong Safety-Net Act" to increase oversight and transparency in the 340B drug pricing program," reported Patient Daily.

In a statement announcing the bill, Bucshon said it's "imperative" to address concerns with the 340b program, "ensuring its benefits are reaching and helping vulnerable patients.”