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Ranking Member Cassidy Opens Investigation into Hospital Revenue Generated by 340B Drug Program

WASHINGTON – U.S. Senator Bill Cassidy, M.D. (R-LA), ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, is seeking information as part of an investigation as to how certain hospital systems may spend revenue generated from the 340B Drug Pricing Program, a federal program that allows eligible hospitals to purchase prescription drugs at a discounted rate with the expectation that the program will benefit low-income patients. This letter follows multiple reports of certain 340B recipients announcing record-setting profits with no transparency on if and how much of that profit benefits patients.  

In 2021, Richmond Community Hospital, a 340B-eligible hospital in Virginia owned by Bon Secours, generated more than $90 million in profits, among the highest profit margins of all Virginia hospitals. According to a 2022 report, the 340B program was the source of the “vast majority” of the profits of Richmond Community Hospital. Additionally, in April 2020, Cleveland Clinic’s flagship hospital began participating in the 340B program as a “rural referral center,” even though it is located near central Cleveland. The hospital, which is structured as a nonprofit health system, reported $1.35 billion in net income in 2021. That same year, the hospital generated approximately $136 million in revenue from the 340B program.     

Neither hospital system has released information as to how they specifically apply the savings received from 340B, and if that money decreases costs and improves care for patients. 

“The intent behind the program is for covered entities to pass on the revenue generated from the 340B Program to improve health care services for eligible patients,” wrote Dr. Cassidy. “However, federal law imposes few requirements with respect to how covered entities may spend the revenue they generate from the 340B Program.” 

“The 340B Program is regularly reviewed by the Government Accountability Office (GAO) and HHS’s Office of Inspector General (OIG), both of which have highlighted issues with the program,” continued Dr. Cassidy. “GAO has identified the troubling recent pattern of 340B covered entities increasingly serving wealthier communities with higher rates of insurance, which is far afield from the program’s intent. Additionally, GAO has found that covered entities often do not share 340B discounts directly with their patients.” 

Read the full letter to Bon Secours Mercy Health here and Cleveland Clinic here




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