Senate HELP Committee Chairman Releases Report on 340B

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On April 24, Senator Bill Cassidy (R-LA), the Chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, a report on “how covered entities use and generate revenue from the 340B Drug Pricing Program.” The —the product of an investigation originally in 2023—assessed information from numerous stakeholders, including four covered entities (two hospitals and two federally-qualified health centers (FQHCs)), two contract pharmacies, and three drug manufacturers “in order to gain a comprehensive understanding of where the dollars generated by the [340B] program flow and how such revenue benefits patients.” 

The report notes that Senator Cassidy’s investigation “underscores that there are transparency and oversight concerns that prevent 340B discounts from translating to better access or lower costs for patients.” The report calls on Congress to reform the program and outlines five specific recommendations for reform:

1. Requiring covered entities to provide detailed annual reporting on how 340B Program revenue is used to ensure direct savings for patients, providing a more transparent link between program savings and patient benefit;
2. Addressing potential logistical challenges caused by increased administrative complexity, leading to burdens that may impede patient benefit from the program;
3. Investigating the types of financial benefits contract pharmacies and TPAs (third-party administrators) receive for administering the 340B Program to ensure that increasing fees do not disadvantage covered entities and patients;
4. Requiring transparency and data reporting for entities supporting participants in the 340B Program (i.e., contract pharmacies and TPAs); and
5. Providing clear guidelines to ensure that manufacturer discounts benefit 340B-eligible patients, including examining legislative changes to the definition of eligible patient and contract pharmacies’ use of the inventory replenishment model.

According to the report, the replenishment model “does not physically separate 340B and non-340B drugs in the pharmacies’ inventory. Instead, pharmacies dispense non-340B-priced drugs to 340B patients and then replenish their inventory with 340B-priced drugs covered entities purchase once an entire package of drugs is dispensed. Once purchased by covered entities, manufacturers ship these drugs directly to the contract pharmacy under a “ship to/bill to” model.”

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