Henry Waxman headshot
Ex-U.S. Rep. Henry Waxman (D-Calif.) says in a Health Affairs commentary that criticism of the drug discount program often “reflect[s] a misunderstanding of Congress’ intent.”

340B’s Critics Often Misunderstand its Intent, Ex-House E&C Chair Waxman Says in Health Affairs Commentary

Henry Waxman, a California Democrat who was one of the original sponsors of the 340B law when it was created in 1992, says in a commentary in Health Affairs that criticism of the drug discount program often “reflect[s] a misunderstanding of Congress’ intent.”

Waxman served in the House for 40 years including as House Energy and Commerce Committee (E&C) chair and ranking Democrat. E&C has jurisdiction over the 340B program. Waxman was health subcommittee chair when the 340B law was drafted thirty years ago and was E&C Chairman when the 340B law was expanded to additional hospitals as part of the Affordable Care Act in 2010. 

Waxman says, quoting the committee report that accompanied the bill that created 340B, that by giving safety-net hospitals, health centers, and clinics access to drug price reductions, Congress intended to enable them “to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.”

“Those guiding principles remain the North Star for 340B today,” he says. “We created 340B to ensure the safety net that cares for the uninsured and those living with low incomes or in rural areas of the country would remain strong.”

Waxman writes that some critics “assert that the intent of 340B is for providers to reduce the price of drugs for their patients.” He says that while many providers do so, 340B “is designed to provide financial resources to safety-net providers that help them furnish comprehensive care that includes, but is not limited to, pharmaceuticals.”

Waxman said drug manufacturers that restrict 340B pricing when providers contract with outside pharmacies say that contract pharmacy growth “is inconsistent with the original intent of the program.”

The government, he notes, “has informed many of those companies that their policies are unlawful and threatened to impose penalties if they do not restore 340B pricing.” Courts are considering several drug manufacturer lawsuits to block 340B’s enforcement, he adds.

“As the congressional architects of 340B, we are pleased to see that it continues to focus on hospitals that provide the bulk of care to patients living with low incomes and those in rural areas,” Waxman concludes. “It is a successful model that should continue for decades to come.”

Waxman discloses in the piece that 340B Health, the trade group for 340B hospitals, is a client of Waxman Strategies, the consulting and lobbying firm which he runs with his son Michael.  Waxman has been chair of the firm since retiring from Congress in 2015. In addition, he serves as a Regent Lecturer for University of California, Los Angeles, and as an advisor and lecturer at the Johns Hopkins Bloomberg School of Public Health. His Health Affairs article about 340B reaching its 30th anniversary was published Dec. 7.

Waxman’s essay coincides with an uptick in talk about potential 340B legislation.

Republican Brett Guthrie (Ky.), who in January is expected to assume Waxman’s old post as E&C health subcommittee chair, recently said he hopes Congress during its next session will do more to make hospital prices transparent. He specifically cited as an example the difference between what hospitals pay for 340B-acquired drugs and what they charge private payers for those drugs.

Robin Kelly (Ill.), the outgoing E&C full committee vice chair, said during the same event as Guthrie that she hoped Congress will address healthcare providers’ concerns about 340B during its lame duck session scheduled to end Friday.

Vacheria Keys, director of regulatory affairs for the National Association of Community Health Centers, told news organization Axios last week that NACHC plans to push for legislation to require manufacturers to stop their 340B contract pharmacy restrictions on all provider types.

Aimee Kuhlman, vice president of federal relations at the American Hospital Association, told Axios, “I don’t think we’re at the point yet of saying that legislation is needed. I think we need to see where the court cases go.” Axios said 340B Health declined to say whether it supports a legislative solution next year. In February 2022, 340B’s Health’s president and CEO said her group was prepared to go in the direction of a federal legislative solution to the contract pharmacy stalemate but the organization has not made an aggressive push for a legislative fix.

Advocates for Community Health, a national health center association founded in 2021, is refining proposed legislation to create a separate drug discount program called 340C open to health centers and other unspecified covered entities.

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