Legislation under consideration in the Tennessee General Assembly would prohibit efforts to increase the transparency of the federal program, which requires drug manufacturers to sell discounted drugs to specific entities with the goal of expanding affordable healthcare but does not require hospitals to transfer these savings directly to the prices consumers pay for drugs.
The legislative summary for Senate Bill (SB) 1414, by State Senator Richard Briggs (R-Knoxville), claims the legislation would expand an existing law that prohibits “discrimination against 340B entities. ” 340 B entities are specific hospitals and clinics that receive lower prices for prescription drugs under the federal 340B Drug Pricing Program established under the Public Health Service Act of 1992.
It would specifically forbid drug manufacturers from requiring hospitals to impose any restrictions on a 340B eligible hospital or clinic to keep them from receiving prescription drugs through the program, including the imposition of data requirements related to how the medications will be used, under the threat of a $50,000 civil penalty for each violation.
While the 340B program generates savings for hospitals, as the Department of Health and Human Services (HHS) requires drug manufacturers that participate in Medicaid to provide discounted rates to qualified healthcare organizations, the lack of a requirement for savings to be passed directly to patients has drawn concerns that it actually results in higher prices for healthcare.
The Council for Citizens Against Government Waste (CCAGW) President Tom Schatz recently revealed in a letter to the Tennessee Senate Commerce Committee, “forgone rebates on prescriptions filled with 340B pricing increased Tennessee commercial employer costs by $123 million and state and local government healthcare plans by $18 million,” while the legislation under their consideration would result in another hike of “$25.2 million for commercial employers and $3.7 million for state and local government plans.”
Additionally, a study released earlier this month by the National Alliance of Healthcare Purchaser Coalitions found that commercial prices were 7 percent higher at large hospitals participating in the 340B program, while the cost of outpatient procedures was 20 percent higher in 340B hospitals. The study claimed that the 340B program results in $36 billion in increased healthcare spending.
Ryan Long of the Paragon Institute recently explained that the federal program costs drug manufacturers money and gives hospitals an incentive to prescribe more expensive medications.
“It actually has a big impact on federal spending. You want to get the lowest price you can for a drug, and you want to be reimbursed the most you can for a drug,” said Long on the “You Decide Health” podcast. “If you prescribe higher-cost drugs, Medicare reimburses up here, and you get a really big discount. The higher the price, the more money you’re going to make. There’s an incentive to use higher-priced drugs.”
Hospitals have broad discretion over how they use the savings, which were intended by federal law to make healthcare more affordable for patients, but one hospital drew scrutiny after funding controversial Diversity, Equity, and Inclusion (DEI) programs and offering reduced prices on transgender surgeries and treatments, including for minors, while benefiting from the 340B program.
Recently named as a contender for “the wokest hospital on America” by Consumers’ Research, Town Hall reported last month that the Cleveland Clinic generated more than $130 million through the 340B program during its first year of participation. Years later, the outlet reported it has created “LGBTQ+ exclusive clinics, multiple minority-only health programs, [and] ‘green’ energy goals,” while its DEI staff members pledge to embed the controversial ideology throughout the institution.
“I don’t believe that diversity and inclusion should ever be a standalone strategy,” said Jacqui Robertson, the Chief of DEI at Cleveland Clinic, in an excerpt of the hospital’s website obtained by Consumers’ Research.
Other critics have claimed the 340B program results in ghost hospitals where billings are generated but virtually no services are rendered, and in Virginia, legislation was amended last year by Governor Glenn Youngkin to prevent the 340B program from effectively forcing taxpayers to subsidize medical treatments for illegal immigrants.
The State Senate Calendar and Rules Committee is scheduled to review the legislation ahead of a full vote. House Bill (HB) 1242 by State Representative Esther Helton-Haynes (R-East Ridge) is similarly being scheduled for a full vote in the State House.
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Tom Pappert is the lead reporter for The Tennessee Star, and also reports for The Pennsylvania Daily Star and The Arizona Sun Times. Follow Tom on X/Twitter. Email tips to [email protected].
