Kathy Tran headshot
Virginia Del. Kathy Tran (D) says her bill to to require more accountability from 340B hospitals was prompted by The New York Times' investigation of alleged 340B program misuse detrimental to a Richmond hospital in a predominantly Black neighborhood.

New York Times 340B Hospital Exposé Leads to a Vote Later Today in a Virginia House Subcommittee

A Virginia House subcommittee is voting later today on a Democrat’s bill to require more accountability from 340B hospitals—a direct consequence of The New York Times’ exposé about alleged 340B program misuse involving a Richmond, Va., hospital.

The scheduled vote will come one day after the September 2022 investigative article received even more national exposure on the newspaper’s podcast The Daily. It is the third most-listened-to podcast in the U.S. with a reported 4 million daily average downloads.

The Times reported that Bon Secours Richmond Community Hospital, located in the city’s predominantly Black East End, has opened offsite outpatient locations in wealthier, white parts of Richmond and profited from billing insured patients at these locations at above cost for 340B-acquired drugs. The hospital meanwhile has “severely limited supplies and facilities” despite having “the highest profit margins of any hospital in Virginia,” the Times said. Nationally, 340B program critics cite the article as evidence why the 340B program must change.

Virginia Del. Kathy Tran’s bill, HB 2472, would require the state’s 340B hospitals annually “at a minimum” to:

  • disclose the hospital’s estimated 340B program savings, defined as 340B drug acquisition costs compared with group purchasing organization drug pricing
  • describe how they use 340B program savings to benefit the residents of the geographic area in which the hospital is located
  • report on the “hospital’s commitment to continue rigorous internal oversight to ensure that the hospital’s 340B Drug Pricing Program meets the federal Health Resources and Services Administration’s program rules and guidance.”

Every year by Feb. 1, Virginia 340B hospitals would have to submit a “340B Covered Entity Commitment to Good Stewardship Principles Annual Report” to a state-created nonprofit organization that now collects and publishes performance data on Virginia hospitals, ambulatory surgical centers, and long-term care facilities. The 340B hospital information would be posted on the nonprofit organization’s website.

If HB 2472 is approved by the House Health, Welfare, and Institutions subcommittee, it would be voted on next by the full committee and, if approved again, by the full House. Feb. 7 is the last day for each legislative chamber to act on its own legislation. The 2023 session is scheduled to end Feb. 25.

National Hospital Groups’ Voluntary Initiatives

In an interview last night, Tran, a House Democratic deputy whip, explained that her bill effectively would require Virginia 340B hospitals to abide by the American Hospital Association’s now purely voluntary 340B Hospital Commitment to Good Stewardship Principles. The AHA released its principles in September 2018, when Republicans controlled both chambers of the U.S. Congress. Hospitals feared during that time that the GOP would pass legislation curtailing their participation in 340B.

According to a list last updated in February 2020, nine Virginia hospitals had signed the AHA’s 340B principles. According to a different list on hospital group 340B Health’s website, 31 Virginia hospitals participate in 340B. According to the U.S. Government Accountability Organization, nationally as of 2019 there were 2,523 hospitals in the 340B program.

340B Health, under its prior name Safety Net Hospitals for Pharmaceutical Access, in June 2012 issued and urged its members to voluntarily adopt six principles of responsible 340B program stewardship. Mid-2012 was another period of heightened scrutiny of 340B hospitals. SNHPA’s principles do not appear to be available any longer on 340B Health’s website. Since 2015, 340B Health has encouraged its members to voluntarily create an “impact profile” with information including:

  • the hospital’s approximate annual 340B savings
  • specific programs and/or services 340B savings help support
  • services or programs provided to low-income and/or rural patients that would otherwise be unavailable in the hospital’s service area
  • programs and/or services a hospital would have to cut back or eliminate if it were to lose 340B savings
  • disproportionate share hospital adjustment percentage
  • distance between the hospital and the next closest institution that provides similar services.

The group’s website says “hundreds of hospitals” have 340B impact profiles.

“Flabbergasted and Angry”

Virginia Delegate Tran said, “When I read The New York Time exposé in September, I was quite frankly flabbergasted and angry in terms of how this particular hospital was taking advantage of their participation in the 340B program and not reinvesting those savings directly into the community it was a part of and how detrimental that has been to the public health of that community.”

Tran said her bill’s purpose “is to ensure there is increased transparency in terms of the savings that are being realized, how that’s being invested into the community, making sure there are good audit protocols in place, and that everybody has access to this information.”

“Hopefully it will spark community conversations that are needed to ensure that there’s good input into how those funds are being spent,” she said.

Tran, who represents Virginia’s Fairfax County suburbs south of Washington, D.C., said she had had conversations with the Virginia Hospital and Healthcare Association and some individual 340B hospitals before she introduced her bill. “There were suggestions about whether any additional reporting could be voluntary, or to not have this at all because they think they are doing adequate work in this space,” she said. “But we’re proceeding. I’ve also been in touch with community leaders and other stakeholders who want to ensure that” the predominantly Black Richmond neighborhood where the 340B hospital at the center of the Times exposé is located “gets the investment it deserves because the hospital is participating in the 340B program.”

Tran said witnesses at today’s hearing “will speak about the importance of transparency and hopefully also touch upon what happened when these savings that are meant to be in the community aren’t 100% directed back into the community—what does that mean for community well-bring and public health.”

“I’m not a medical professional,” Tran said. “I come at this as a delegate, as a mom with five kids. I came to this country as an immigrant. I see my own parents struggle with health care costs. To this day, my mother will cut her migraine pills in half because each pill is extraordinarily expensive. I come at this from the perspective we should do better and do right by our communities.”