Sen. Bernie Sanders speaking at a podium
Senate HELP chair Bernie Sanders (I-Vt.) talked about taking away hospitals' tax-exempt status when he was asked during an interview about alleged hospital abuse of 340B.

Sanders, Asked About Abuse in 340B, Cites His Past Effort to End a Hospital’s Tax Exemption

U.S. Sen. Bernie Sanders (I-Vt.), the new chair of the Senate committee that oversees the 340B program, recently answered a reporter’s question about alleged hospital abuse of 340B by noting that he tried to revoke a Burlington, Vt., hospital’s tax-exempt status when he was the city’s mayor in the 1980s.

“I did not believe they were fulfilling their responsibility to serve the poor and working families,” Sanders said in an interview with Kaiser Health News published yesterday.

“If you’re not going to pay taxes, what are you, in fact, doing?”

Ty Bofferding, spokesperson for Sen. Bill Cassidy (La.), the Health, Education, Labor, and Pension Committee’s ranking Republican, said in response to a request for comment on Sanders’ remarks that “Senator Cassidy has long had an interest in taking a closer look at how the 340B program is currently operating. He is also deeply concerned about recent reports of abuse in the 340B program and how bad actors hurt patients. It is an important program and Cassidy will want to ensure it is serving patients as intended.”

Sanders and Cassidy’s statements about 340B are believed to be their first on the drug discount program since formally becoming HELP Committee chair and ranking member last week. Their words about 340B probably will rattle hospitals and uplift drug manufacturers.

Sanders was asked during the interview what he can actually accomplish as HELP chair.

“[From] a poll a couple of months ago just among Republicans. Top concern? High cost of prescription drugs,” Sanders answered. “We’re long overdue to take on, in a very bold way, the greed and outrageous behavior of the pharmaceutical industry.”

“You’ve got the insurance companies, the PBMs, and pharma,” Sanders said in response to a question about whether pharmacy benefit managers could be a target of drug pricing legislation. “Everyone wants to blame the other guy. And yet they’re all culpable. And we’re going to take a hard look at it.”

Sanders was asked if he plans to bring in pharmaceutical executives to testify before the HELP Committee. “We’re looking at all options,” he said.

Hospital’s Tax Status

Sanders made his remarks about 340B in an interview with Kaiser Health News senior correspondent Arthur Allen. He asked Sanders, “What about the 340B issue? Accusations that hospitals are gaming the system.”

Sanders answered, “Yes, it is something. One of the first things [I did] when I was mayor of Burlington from 1981-89 was take away the tax-exempt status of the hospital…. We had a lot of discussions, and the situation improved. Right now the criteria to receive tax-exempt status is extremely nebulous. That’s an issue somewhere down the road I want to look at.”

Sanders apparently was referring to efforts during the late 1980s while he was Burlington mayor to get tax-exempt University of Vermont Medical Center and the University of Vermont to make payments to the city in lieu of taxes. Sanders told The New York Times in October 1987, “we placed the hospital on our tax rolls at the advice of our attorney on the grounds it is not a charitable institution. We sent them a bill for $2.8 million.’”

Nonprofit news organization VTDigger reported in November 2019, “While the city lost a court battle against the hospital, both [the hospital and university] now pay the city for some of the services they receive.”

UVM Health Network spokesperson Phillip Rau said yesterday that UVMC “is proud to be a nonprofit safety net community hospital, as well as the state’s only Level 1 trauma center, providing high quality necessary health care to all of our patients regardless of ability to pay.”

“We are committed to improving the health and wellness of our communities in Vermont and Northern New York, and to being a leader in financial assistance and charity care, investing more than $250 million in community benefit in 2021,” Rau said. “The 340B program is vital to our mission, as it enables covered entities to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services. 340B helps us close the gap between the cost of providing health care and the reimbursement we receive from government payers. It provides critical support for vital initiatives such as our Health Assistance Program, through which we were able to help more than 2,300 patients save a total of nearly $3 million in prescription costs last year.”

The American Hospital Association had no comment about Sanders’ remarks. Hospital group 340B Health did not respond to a request for comment.

In September 2020, Sanders signed a Senate Democratic letter to Pharmaceutical Research and Manufacturers of America (PhRMA) President Stephen Ubl expressing “deep concern” over drug manufacturers’ denials or impositions of conditions on 340B pricing on drugs dispensed by contract pharmacies. Sanders’ office declined to comment about that letter nor would it say whether Sanders will address drug makers’ 340B contract pharmacy policies as HELP chair.

Sanders said his priorities will include what drug companies owe the country in light of federal R&D support; “reasonable” drug pricing; primary care and federally qualified health centers; prescription drug “patent thickets”; health care staffing shortages; and dental care.

“We ain’t gonna get” Medicare for All, he conceded.

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