CCAGW Urges Louisiana Senate Health and Welfare Committee to Oppose HB548 | Council For Citizens Against Government Waste

CCAGW Urges Louisiana Senate Health and Welfare Committee to Oppose HB548

State Action

May 2, 2022

Senate Health and Welfare Committee
Louisiana Senate
900 North Third Street
Baton Rouge, LA 70802

Dear Senator,

On behalf of the 16,352 members and supporters of the Council for Citizens Against Government Waste (CCAGW) in Louisiana, I urge you to vote against HB548, which will make changes to the federal 340B drug discount program.  Congress created the 340B program in 1992 to fix a problem it created only two years earlier when it implemented government set price controls, or rebates, in the Medicaid drug benefit program.  As a condition to participating in Medicaid, pharmaceutical companies must partake in the 340B program by giving discounts between 20-50 percent to certain federally funded facilities and disproportionate share hospitals that receive government subsidies to treat large numbers of Medicaid patients.  But the statute does not define “patient” or require covered entities to pass on drug savings to patients.

A January 2018 House Energy and Commerce Committee report on 340B identified insufficient oversight, unreliable data, and inadequate reporting requirements.  The program’s failures were the result of several factors, including the lack of clear statutory intent and definition of an eligible patient, as well as lax requirements to report savings and how that money is used.  A November 2021 Xcenda study, “340B and Health Equity: A Missed Opportunity in Medically Underserved Areas,” provides further evidence of how the 340B safety-net program is being exploited by failing to help low income and vulnerable individuals get access to low-cost prescription drugs.  Instead, it is boosting hospitals’ coffers and their contract pharmacies’ profits that are largely located in areas that do not serve low-income people.

In a wide-ranging analysis of Richmond Community Hospital in Virginia, owned by Bon Secours, which was supposed to reinvest profits from 340B drug sales into its facilities and improve patient care, a September 24, 2022,  New York Times article reported that the money was being used instead to invest in facilities in the city’s wealthier neighborhoods.  Dr. Lucas English, who worked in the hospital’s emergency department until 2018, said, “Bon Secours was basically laundering money through this poor hospital to its wealthy outposts … It was all about profits.”  Dr. Peter B. Bach, who has written about the increased number of clinics opened in wealthier areas using 340B profits, said the hospitals are “nakedly capitalizing on programs that are intended to help poor people.”  Similarly, Louisiana has 77 hospitals that participate in the 340B program and have contracts with 1,890 pharmacies nationwide.  Yet, 75 percent of those 340B hospitals are below the national average for charity care levels.  Additionally, language in HB548 related to manufacturers’ obligations under the program is premature as this issue is still in litigation across the country. 

I urge you to contact your congressional delegation and ask them to reform the program, which would include providing a clear definition of a patient.  CCAGW’s preference is the patient is indigent, not eligible for Medicaid, and does not have insurance.  Again, I respectfully ask that you vote against HB548.                                                            

Tom Schatz
President, CCAGW

Click Here for PDF Version