340B Savings Must Continue to Drive Local Investment in Healthcare

Late last month, we saw a news report about the 340B drug pricing program. The association I lead represents more than 1,600 hospitals and health systems that participate in 340B. They are among the safety-net providers that receive mandated discounts from drug companies on certain outpatient drugs. They invest these savings into providing more care and treating more patients in need.

U.S. Sen. Bill Cassidy, a Republican from Louisiana who is also a well-respected physician, chairs the influential Senate Health, Education, Labor, and Pensions Committee, which has jurisdiction over 340B. Over the past decade, he has raised various questions and concerns about hospital use of 340B. In November 2023, he began a 340B investigation, beginning with two 340B hospitals and later adding two health center networks, two national pharmacy chains, and two drug companies. Late last month, he released a report with findings from this multi-year investigation.

The report makes clear that a key interest of Senator Cassidy’s is to understand how the program supports care for vulnerable patients, a laudable goal that I think everyone supports. For that reason, my organization continually conducts research in that area, recently releasing two reports demonstrating that 340B hospitals treat more patients from low-income ZIP codes and provide more care for which they are unreimbursed or under-reimbursed than other hospitals.

As we review this new report, one of our key concerns is the suggestion that 340B savings should be used to provide direct savings for patients. As noted by our research, 340B hospitals use a significant share of their 340B savings to subsidize direct patient care. But they also use their savings to invest in new services and clinics that are needed in their communities. 340B plays a critical role in allowing hospitals to invest resources to meet these needs.

Here’s an example of the need for 340B to be used for investments in services. One of our member hospitals is located in a rural area that had almost no access to lifesaving mental health care. These services are often underpaid by Medicaid and other government insurers that make up a significant share of 340B hospital payors. That hospital used some of its 340B savings to develop and operate a behavioral health clinic to fill the gap and to sustain that care amid underpayments from payors. For that community, this investment produces significant patient care benefit that would not be possible if the hospital were forced to use 340B only to offer discounted drugs or subsidize existing services.

This is an example of precisely how Congress intended 340B to work. When they approved the statute, lawmakers specifically stated that a key goal was to reduce providers’ costs of operations. That only works when those providers can invest savings into capital improvements, specialized services, and community benefits based on specific patient care needs in their area.

Sen. Cassidy has made clear his interest in working with 340B providers, and I expect that he will hold hearings on 340B later this year. I’m happy to note that 340B continues to have strong bipartisan support from members of Congress, in large part because it is working well.

We remain committed to working with Sen. Cassidy and all of Congress to demonstrate that we must protect 340B so it continues to deliver value to underserved patients.