WASHINGTON – U.S. Sen. Chuck Grassley introduced legislation that would inject needed transparency in a targeted way into the 340B program. The 340B program was created by Congress in the Veterans Health Care Act of 1992 and allows hospitals and other health care entities to receive discounted prices on prescription drugs and biologics from drug manufacturers. By law, these drug manufacturers must offer 340B discounts to covered entities in order to participate in the Medicaid program.

Despite strong bipartisan support for this important program, several weaknesses have become apparent. Congress originally intended the program “to stretch scarce Federal resources as far as possible.” The 340B statute does not state how this is to be done. The statute does not require hospitals to track or report savings or how they are used. Furthermore, the statute does not require hospitals to report the level of charity care they provide to patients. The lack of reporting requirements have resulted in a lack of transparency in this program.

The Ensuring the Value of the 340B Program Act addresses this problem by requiring participating hospitals to report the total acquisition costs for drugs collected through the 340B program, as well as revenues received from all third party payers for those same drugs. By understanding the difference in those two amounts, Congress will be able to assess whether the program is working as intended.

Some people have argued this is not a taxpayer program. However, it does interact with federally funded programs. Of great concern is a 2015 report by the Government Accountability Office that found in both 2008 and 2012, per beneficiary Medicare Part B drug spending was substantially higher at 340B hospitals than non-340B hospitals. The GAO concluded that this difference was not due to a difference in how sick the beneficiaries were, but rather, it was due to using more expensive drugs or using more drugs. This is concerning for the individual beneficiaries health as well as their pocket book.  It is also a concern to Medicare expenditures for the taxpayer.

“Transparency improves accountability and integrity in government, which is particularly important when it comes to federal payment programs,” Grassley said. “I’ve long fought for transparency measures throughout government agencies and programs because they help weed out wrongdoing and ensure taxpayer dollars are being used efficiently and effectively, and for their intended purposes.”

Grassley has been working to improve and make the 340B program more transparent since 2004, when he raised concerns about prescription drug overcharging to then-Department of Health and Human Services (HHS) Secretary Tommy Thompson. He has continued his vigorous oversight through letters and requests for detailed information on 340B program payments, reimbursements and how much oversight federal agencies performed regarding the program.