The Senate’s 340B Probe Should Reveal Some Interesting Things

When lawmakers first implemented the 340B Drug Pricing program in 1992, they wanted to help hospitals and other covered entities stretch federal healthcare dollars further so that they could better serve low-income patients and communities. But in the three decades since, the program has become quite controversial. And now it is about to be probed by a Senate committee.

Led by Louisiana Sen. Bill Cassidy, the Senate Committee on Health, Education, Labor and Pensions (HELP) is set to take a deep dive into 340B by investigating two hospital groups accused of using the program to generate excessive profits. Bon Secours is one of the targets of the investigation.

A Money Laundering Operation

The investigation is being launched as a result of a combination of federal audits, news reports, and watchdog complaints claiming that Bon Secours has turned the 340B program into a profit generating machine. One particular hospital cited by a New York Times report, Richmond (VA) Community Hospital, is allegedly little more than a “glorified emergency room”. Some have gone so far as to accuse Bon Secours of using the hospital as a money laundering operation.

Under the program’s original intent, 340B was intended to give hospitals more money to put into serving low-income communities by reducing the amount of money they need to pay for certain prescription drugs. The discounted drugs can be sold to patients at retail, but they don’t have to be. Hospitals can pass along their savings to patients.

Bon Secours is being accused of selling discounted drugs at prices up to seven times higher than what they paid and then diverting the profits into things that have nothing to do with serving low-income communities. Whether or not that is true should come to light by way of the Senate investigation. Meanwhile, pharmaceutical companies and other 340B critics will continue pointing to Bon Secours as evidence of a federal program that has gotten out of hand.

Participating in 340B Isn’t Hard

Getting set up in the 340B program isn’t especially complicated. A typical example would see a hospital engaging the services of a firm like Florida-based Ravin Consultants to develop and implement a 340B drug pricing program. As long as the hospital met program eligibility requirements, it could sign up and start purchasing discounted drugs directly from pharmaceutical companies.

The savings generated by those discounts, and any additional monies that came from selling the drugs at retail, would then be diverted into expanding services to low-income recipients. The hospital would have to document how it spends the money. Regular 340B audits are conducted to keep the hospital on track.

In its 30+ years of operation, the 340B program has resulted in hundreds of billions of dollars in prescription drug savings. For the record, the savings are achieved by way of discounts offered by pharmaceutical companies. There is no direct federal funding involved.

Plenty of Opportunity For Abuse 

The 340B program has gradually become more controversial over the years. As more covered entities have enrolled in the program and more discounts passed on, opportunities to abuse the program have also increased. Just how much abuse actually exists could be revealed by the Senate investigation. We will have to wait and see.

Congress had good intentions when it launched 340B back in 1992. But as with all federal programs, 340B has been hard to keep under control. There is always the potential of abuse when so much money is involved. And unfortunately, even the best of intentions does not protect the 340B program. I expect the Senate investigation will make that reality abundantly clear in the months ahead.