A Virginia House subcommittee last week voted 3-2 against a Democrat’s bill to require more accountability from 340B hospitals about how they use 340B program revenues.
In a reversal of their parties’ normal stances on 340B nationally, Democrats voted for HB 2472 and Republicans against it. Subcommittee members did not respond to requests for comments about their votes. In another departure from the usual pattern nationally, state civil rights groups and a state ecumenical religious group testified in favor of the bill.
The defeated bill was inspired by a September 2022 investigative article in The New York Times about alleged 340B program misuse involving a Richmond, Va., hospital.
HB 2472, would have required 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 had 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 have been posted on the nonprofit organization’s website.
HB 2472’s sponsor, state Del. Kathy Tran (D), told 340B Report last week that her bill effectively would have required Virginia 340B hospitals to abide by the American Hospital Association’s voluntary 340B Hospital Commitment to Good Stewardship Principles.
“There’s nothing more to it,” Trans said at the Jan. 26 hearing. If a hospital has been “reinvesting the funds as intended into the local community, then you shouldn’t be afraid to lay your cards out,” she said.
Tran said when she told stakeholders in advance what would be in her bill, their reaction was, “That’s it?”
Sarah Cariano, senior health policy analyst at the Virginia Poverty Law Center, told the subcommittee, “No one here is saying the 340B program is bad.”
“We know that our hospitals commit a lot to our communities,” Cariano said. “But the 340B program is very specifically designed for reinvestment to expand services to expand the number of vulnerable patients who can be served. And the federal government does not look at that. There are no auditing reporting requirements that look at how much is saved or how much profit is made and where those investments are going in the community. And there have been cases were, because this is not looked at, the program lacks a little bit of integrity. And we are hoping to just put that in.”
“This bill is very simple,” she said. “It’s not, ‘We need a line-by-line.’ It’s giving a narrative of how you used it. It’s saying give us an estimate of your savings. I think it is not that administratively burdensome for the hospitals.”
Kim Bobo, executive director of the Virginia Interfaith Center for Public Policy, told the subcommittee, “We too support this bill.”
“We are concerned about health equity and we think this is an opportunity to encourage our hospitals to put more money and resources into low-income communities,” Bobo said.
Freddy Mejia, deputy director of policy at the Commonwealth Institute for Fiscal Analysis, told subcommittee members, “I actually live footsteps away” from the Richmond 340B hospital in a predominantly Black neighborhood that was the focus of the Times investigation. The hospital allegedly was deprived of resources by its parent health system despite having the highest profit margins of any hospital in Virginia.
“I promise you, if you saw [the hospital] you would keep on walking,” Mejia said. The health system, Bon Secours Health, made no improvements to the hospital he said “until there was some sunlight to this issue. This is what the bill is asking for. With a little bit of sunlight, it’s amazing what can grow.”
The only testimony against the bill came from Bon Secours.
Rhodes Ritenour, the health system’s vice president of external and regulatory affairs, said, “This is a very complicated area of federal law.”
“Our hospital system has a lot of questions about some of the terms that are in this bill,” Ritenour said. “This bill would increase administrative and regulatory burdens on the 31 hospitals in Virginia that are 340B eligible by requiring all of us to report to the state about how we’re performing under a federal law. There are no other states that have such reporting requirements since this is clearly the prerogative of the federal government. And in fact we can’t find any other law where we have to merely confirm with the state that we are complying.”
“We follow the law at Bon Secours,” Ritenour continued. “We are intentionally in underserved areas. And our hospitals in places like Portsmouth and Petersburg and Emporia and Church Hill are 340B eligible hospitals where we take the savings from transactions we have with pharmaceutical companies for exorbitantly priced, often lifesaving drugs. We take those savings and we reinvest in the communities we serve. It’s that simple and we do it day in and day out.”
“If you’re interested in seeing how those savings are spent, we invite you to come to any of those communities that we serve,” he concluded. “This bill will not increase the health or health equity of any community we serve or increase any patient outcome.”
Sharpton: 340B Hospitals, Clinics Need More Oversight
The hearing came a week after one of the nation’s best known civil rights leaders—the Rev. Al Sharpton—called for stronger oversight of 340B hospitals nationally in a commentary in AFRO News, one of the nation’s oldest Black news organizations.
“Hospitals and clinics who participate in the drug discount program are in dire need of more oversight from Congressional committees and the Biden Administration,” Sharpton said. “As part of that oversight, the drug discount eligible facilities should provide a detailed accounting of how the medicines they can buy for pennies on the dollar are, in fact, benefiting patients and not the bottom line.”
“In the near future I will be convening community leaders, policy makers and private sector partners to seek a solution,” Sharpton said. “It’s been thirty years since Congress created the drug discount program, and it rightly enjoys bipartisan support. But making sure the program is improving health equity, not doubling down on a system that enriches already wealthy neighborhoods at the expense of poor underserved communities, should be a top priority.”
In October 2020, Sharpton sent a letter to leaders of the Congressional Black Caucus imploring them “to end insurer greed.”
“If insurance companies used some of their record profits to include low-income neighborhoods in their coverage networks … hospitals and doctors’ offices in Black communities will stay open,” he wrote. “This will not only provide accessible healthcare to Black Americans, but also ensure jobs and economic activity in these communities.”