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Grassley Questions Hospital 340B Program Profits

Written by: Ellyn L. Sternfield

In a March 2013 article, I wrote about members of Congress calling for increased oversight of the 340B drug discount program and, in particular, hospital use of 340B drugs. This week, Senator Charles Grassley of Iowa disclosed the results of his inquiry into the profits that three North Carolina hospitals have realized from the 340B drug discount program. Senator Grassley found that the overwhelming majority of hospital patients who received 340B drugs were not uninsured, but rather were covered by Medicare or commercial insurance, and that the multi-million dollar profits each hospital has generated from insurance payments for 340B drugs has increased dramatically since 2009. In a letter to the HRSA administrator, Grassley demanded to know whether HRSA is collecting and analyzing data on hospital revenue realized from 340B drugs and how that revenue is being used by the hospitals.

At the heart of Grassley’s concerns is why the 340B program exists – Is the program intended to provide access to drugs for uninsured safety net patients, or to provide hospitals and other entities with revenue used to increase patient access to health services? In announcing the results of his inquiry and in his letter to HRSA, Grassley acknowledged that both HRSA and Congress need to clearly answer that question. While that debate continues, 340B covered entities must be prepared for increased scrutiny and may need to defend their use of 340B program proceeds.


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Theresa advises clients on all aspects of the pharmaceutical supply chain, including counseling industry stakeholders on a range of business, legal, transactional, and compliance matters. She provides clients with strategic counseling and creative business modeling that considers legal restrictions and regulatory risk in light of innovation and business goals.