Shockwaves from the New York Times’ investigative piece on the alleged misuse of 340B savings by a Catholic health system in Richmond, Virginia continues to spread, as local news outlets and government leaders from all levels respond. The lengthy article accused Bon Secours Mercy Health System of exploiting the 340B discount program at the expense of one of its inner-city hospitals to enrich its other hospitals located in wealthier, suburban neighborhoods.
The piece, written by two of the Times’ investigative reporters, accuses Bon Secours Mercy of taking advantage of its access to the 340B program at one of its poorest hospitals located in a predominantly Black and low-income neighborhood in Richmond to extend the reach of the program to wealthier hospitals and clinics. It accuses the system of neglecting its inner-city hospital —Richmond Community Hospital—and investing its significant 340B savings in other hospitals and clinics in more affluent, whiter neighborhoods.
The story, which was released on the front page of Saturday’s edition as part of a series called Profits over Patients, is receiving considerable attention from local newspapers and network affiliates, as well as lawmakers at both the local and federal level.
Most lawmakers who spoke with local news outlets expressed support for the 340B program and emphasized the critical nature of the program for vulnerable communities, while simultaneously calling for increased oversight. The office of Democratic Congresswoman Abigail Spanberger of Virginia’s 7th District, which includes some of Richmond’s suburbs, released the following statement to local news outlets:
“For decades, the 340B Drug Discount Program has provided important benefits to rural and safety-net hospitals in Virginia — and it’s critical for lowering drug costs for Virginians living in rural and underserved areas who are served by community health centers and rural hospitals,” Spanberger’s office said. The Congresswoman “is deeply troubled by reports that Bon Secours Mercy Health System has not lived up to its commitment to the City of Richmond, the federal government, and the communities Richmond Community Hospital serves. She will always support additional oversight of federal programs and tax benefits to ensure not-for-profits are meeting commitments to the communities they serve,” said her office.
Spanberger, who is in a competitive re-election battle, is one of the 340B provider community’s biggest champions and recently spearheaded a bipartisan letter with 181 House lawmakers urging the U.S. Department of Health and Human Services to step up its enforcement of pharmaceutical manufacturers that have placed restrictions or stopped offering 340B discounts in the contract pharmacy setting. Spanberger, along with Rep. David McKinley (R-WV), are lead sponsors of the Protect 340B Act (H.R. 4390) which has 114 House co-sponsors.
Congressman Don McEachin, another Democrat whose district includes the city of Richmond and its Church Hill community where the 340B-eligible Richmond Community Hospital is located, was more succinct, telling the Richmond Times-Dispatch that Bon Secours’s actions are “a horrible way to treat poor people.” The Congressman’s office told Richmond’s CBS local affiliate CBS 6 that “he is currently looking into various avenues of federal oversight or legislative action.”
Tim Kaine (D), one of Virginia’s two U.S. Senators, seemed particularly concerned about the consequences of the Times’s investigation in terms of increased political scrutiny and possible restrictions for the 340B program in his remarks to CBS Richmond. He characterized Bon Secours as a bad actor whose behavior does not reflect most covered entities’ judicious use of 340B discounts, which they invest in to provide critical support and services for underserved patients.
“I’m just worried the story is going to cause a lot of people to have really serious questions about a program that our safety net providers need,” Kaine told CBS, but “Bon Secours needs to have an answer, and we are going to dig into it from the health committee standpoint.” The Senator is a member of the Health, Education, Labor, and Pensions (HELP) Committee.
Kaine called 340B “an absolutely critical program,” in his remarks to CBS, and said “the thought that somebody might be using this program as a profit center as opposed to really helping people was very troubling.”
Virginia’s other Senator Mark Warner (D) agreed. “It is disheartening to see hospitals and health systems reaping the benefits of this law while letting down the communities they’re supposed to serve. While there’s no quick fix to this problem, I welcome increased scrutiny and believe Congress must act to ensure that the integrity of this program is upheld,” Warner’s office said in a statement issued to various local media outlets.
At the local political level, Richmond Mayor Levar Stoney, also a Democrat, issued a statement condemning Bon Secours’s actions as well as a formal request to the Secretary of the Department of Health and Human Services Xavier Becerra to launch an investigation into the health system’s “deeply troubling use of 340B.”
“We strive to build equity into everything we do, and expect organizations serving our community to share those values,” Stoney tweeted.
The Times-Dispatch interviewed State Delegate Otto Wachsmann, R-Sussex, who owned and operated an independent pharmacy in Stony Creek for 18 years until 2019, when he sold it to a federally qualified health center that opened in the same community in Sussex County.
The paper reports that Wachsmann, who said he now works a few days a month for another community health center in Waverly, said the 340B program makes it “financially feasible” for federally qualified health centers, clinics and independent pharmacies to operate in rural Virginia and other medically underserved areas.
The discounted drugs under 340B “can only be used for those patients that are being treated by the covered entity” under the federal law, he told the Times-Dispatch.
National Attention from Influential Group
Nationally, the center-right policy institute American Action Forum (AAF), which receives PhRMA funding and has criticized the 340B program in the past, also weighed in on the Times investigation with a daily column from its President, Douglas Holtz-Eakin, an influential figure in Republican policy circles.
“Now, let me stipulate that I have no clue about the veracity of the reporting in the entire story. But it is entirely possible for a CE to receive discounted 340B drugs, prescribe them to customers with commercial insurance, get paid the market price for the drugs, and pocket the difference. Let’s think about the implications of this,” he wrote in a piece shared with the media.
“Nobody should conclude that every [covered entity] is gaming the 340B Program,” Holtz-Eakin said, “but neither is there enough transparency to evaluate the effectiveness of the program.” Holtz-Eakin called on Congress “to both clarify the program’s purpose as well as empower the Health Resources and Services Administration to make the changes necessary to turn 340B into an effective program.”
The Community Reacts
The Richmond Times-Dispatch delved further into the 340B-eligible clinics of Richmond Community Hospital, and found ten outpatient clinics designated as 340B child sites and thus able to access 340B discounts. These ten sites include an infusion clinic, a cancer institute, and a rheumatology clinic, among others; all located several miles from Richmond Community in wealthier areas of town, usually adjacent to other Bon Secours hospitals which are not 340B eligible.
Several patients who accessed the child site clinics told the Times-Dispatch and CBS Richmond (mostly anonymously) that the bills they received for clinic services listed Richmond Community as the delivery site. One woman whose family member receives expensive infusions at a clinic on a different hospital campus but is billed for infusions occurring at Richmond Community—which the person has never set foot on—told CBS that reading the Times article “felt like a punch in the gut.”
“To hear that…it’s just essentially an ER with very limited supplies and equipment, my heart breaks for the people in that community. That’s not okay,” the woman told CBS 6.
A doctor who also spoke anonymously told the Times-Dispatch that paperwork for a patient he referred for infusion services on the Bon Secours Memorial Regional Medical Center campus listed Richmond Community as the infusion site. When he questioned a Bon Secours executive, he was told “Richmond Community was buying the medicine for the Memorial patients,” according to the Times-Dispatch article. “It’s fraud, really, in my opinion,” said the doctor, quoted in the article.
Jenna Green, a spokesperson for Bon Secours, told the Times-Dispatch that the health system is fully compliant with the program and uses the savings to reinvest in the community.
“As a provider in Richmond’s East End, 340B is critical to our patients,” Green said. “We have and will continue to provide accessible, affordable, high-quality care through this and other programs that improve the well-being of the greater Richmond community.”
A Bon Secours spokesperson told CBS 6: “To suggest that we don’t operate in full support of our important Mission is without merit and we take issue with such baseless allegations,” the spokesperson said. “Today, we continue to build on the legacy of our founding congregation through our commitment to addressing health disparities.”
Bon Secours told the Times it has spent nearly $10 million on improvements to Richmond Community Hospital since 2013, including opening a pharmacy and renovating the cafeteria, emergency department and other areas. The system says it has invested almost $9 million in the surrounding neighborhood since 2018. According to the article, Bon Secours did not disclose how much money it earned through 340B, but said the funds “help us address health disparities while providing community support and outreach.” It said it had provided nearly $18 million in free care to poor patients at Richmond Community Hospital since 2018.