Drug discount program is facing new scrutiny

House hearing set as agency seeks to cut payments to hospitals.

A lucrative drug discount program that is a lifeline for charity hospitals and a money-maker for some health systems will be the subject of a congressional hearing this week.

The 340B program requires drug makers participating in the Medicaid program to give deep discounts on outpatient drugs to hospitals that treat disproportionate numbers of low-income patients covered by government health plans. The program was created in 1992 for charity hospitals like Atlanta’s Grady Memorial Hospital.

But the use of the program has exploded in recent years, with many hospitals that provide little charity care to uninsured patients among the heavy users.

The Atlanta Journal-Constitution last month exposed how metro Atlanta’s hospitals are using the discount program.

A hearing on the program is set for Tuesday before the subcommittee on Oversight and Investigations, which is part of the U.S. House Committee on Energy and Commerce. The hearing, which is focused on examining the oversight of the program, will include testimony from the agency that administers the program, as well as congressional watchdogs that have studied the program and recommended changes.

A 2015 Government Accountability Office report that found that hospitals getting discounts through 340B were prescrib-

ing more drugs, or more expensive drugs, than hospitals that weren’t in the program. The report questioned whether potential profits of the program influenced prescribing.

“With the number of covered entities nearly quadrupling in less than a decade, the 340B program’s lack of sufficient oversight, as revealed by the GAO, is alarming,” said Rep. Tim Murphy, R-Pennsylvania, who chairs the subcommittee.

“As the program continues to expand, our first priority must be to examine how this program is impacting patients, providers, manufacturers, and other stakeholders and ensure that we are protecting program integrity.”

The program is also the target of federal officials looking to cut budgets. On Thurs- day, the federal agency that administers Medicare and Medicaid announced that it wants to slash 340B payments to hospitals.

The program currently allows hospitals to get full reimbursements for drugs purchased at a discount and to use those dollars however they see fit. The government agency says that the proposed changes would allow Medicare to share in some of the savings realized by hospitals that participate in the program.

But hospital groups say such cuts would severely hurt hospitals that serve the poor.

“These new regulations will penalize safety net hospitals participating in 340B and severely impede their ability to sustain vital services and care to patients in the nation’s most underserved communities,” said Association of American Medical Colleges President and CEO Darrell G. Kirch, in a statement released Thursday night.