Politics, Pricing

Dems, Republicans split on 340B drug pricing program in Senate hearing

The dividing line between Senate Democrats and Republicans on the 340B drug pricing program was set on Thursday, with Democrats siding with the hospitals, saying the savings from the program is desperately needed for the poorest populations, while Republicans took the side of drugmakers, saying the program is being abused and needs to be reformed.

But the hearing also put the spotlight on the lack of transparency from both the pharmaceutical and hospital industries, as neither side could agree to some basic statistics, such as what percent of the total drug spend in the US goes into the 340B program.

Lamar Alexander

For instance, the Health Resources & Services Administration, which oversees the program, says that somewhere between 1% and 2% of the nation’s drug spend is attributed to the 340B program.

But Sen Lamar Alexander (R-TN) on Thursday questioned what percent of what Americans spend on prescription drugs is available to safety net hospitals and clinics for the purposes of 340B.

“Is it $6 billion or $8 billion or $14 billion? If it’s 1 or 2%, well that’s just a tax on pharmaceutical companies that we’re spending for a good purpose, but if it’s 6% to 8%, then that’s a pretty big tax. I’d like to get those figures,” Alexander said.

Lori Reilly

Lori Reilly, executive vice president of the lobbying group PhRMA, told lawmakers that the total spend on discounts by pharmaceutical companies was $8 billion in 2016, and that the total 2016 spend on pharmaceuticals in the US was “in the $390 billion range,” though she could not confirm an exact figure to Alexander.

Sen Elizabeth Warren (D-MA), meanwhile, said the size of the US drug market in 2015 was $457 billion, while pointing out that pharmaceutical companies’ margins were significantly higher (she said six times as high) than hospitals’ margins.

Elizabeth Warren

Pew Charitable Trusts, meanwhile, recently spotlighted the various estimates and projections on drug spending in the US, noting the differences among different groups.

And though PhRMA’s Reilly said earlier in the hearing that pharmaceutical companies “do not want this program to disappear,” Warren took issue with PhRMA’s argument that the 340B raises drug prices.

“If 340B didn’t exist, drug companies would have an extra $6 billion in their pocket, that’s less than 1% of global pharmaceutical sales revenue,” Warren said. “The loss that they’re kicking and screaming about is a tiny fraction of the many billions of dollars they pull down every year in profits.”

Representatives of health centers and hospitals, meanwhile, noted that reforms to lower what drugmakers spend on 340B discounts would hurt.

However, reform and more oversight may still come.

study published in Health Affairs in 2014 found that 340B hospitals are expanding their base into communities that tend to be affluent and well-insured, which runs counter to the objectives of the program. The Alliance for Integrity and Reform of 340B, backed by the biopharma industry and other groups, also released a report that found in 2015, 61% of participants spent less on charity care compared to both 2014 and 2013 despite additional revenue received.


First published here. Regulatory Focus is the flagship online publication of the Regulatory Affairs Professionals Society (RAPS), the largest global organization of and for those involved with the regulation of healthcare and related products, including medical devices, pharmaceuticals, biologics and nutritional products. Email news@raps.org for more information.


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