NTU Endorses Bill to Fix the 340B Drug Discount Program

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The Honorable Larry Bucshon
United States House of Representatives
1005 Longworth House Office Building
Washington, DC 20515
The Honorable Scott Peters
United States House of Representatives
1122 Longworth House Office Building
Washington, DC 20515


Dear Representatives Bucshon and Peters:

On behalf of National Taxpayers Union (NTU) and our members across the country, I write to express our support for H.R. 4710, the “340B Protecting Access for the Underserved and Safety-net Entities (PAUSE) Act.” Your bipartisan legislation would place a two year moratorium for new enrollees into the 340B program and institute important oversight reforms to address problems within the program.

The 340B program, established in 1992, requires pharmaceutical manufacturers participating in Medicaid to provide discounted drugs to certain healthcare providers, which serve uninsured and low-income patients. Because 340B enables hospitals to purchase outpatient drugs below market value, many hospitals have an incentive to increase their profit by prescribing more expensive drugs without passing along the savings to the safety-net patients. As a result of these lucrative incentives, hospital enrollment in the 340B program has exploded - up from 7,806 entities in 2013 to 21,554 in 2017, a 176 percent increase.

This exponential growth greatly affects the cost of medicines and helps drive up government spending, increasing from $7.2 billion in total drug sales in 2013 to $16.2 billion in 2016 - 125 percent increase. Ultimately, consumers and taxpayers pay for the diversion of 340B funds through higher drug prices, taxes, and premiums.

Thankfully, your legislation is an important first step towards comprehensive reforms to the program. The 340B PAUSE Act orders a temporary pause on new enrollment into the program, giving Congress ample time to evaluate the program and initiate solutions for the future. This legislation also requires the Office of the Inspector General and Government Accountability Office to conduct a review of operations and costs, a new level of oversight and transparency that the program severely needs.

We are pleased to endorse your bipartisan, pro-taxpayer legislation and urge all members of Congress to cosponsor H.R. 4710 and work towards its swift passage.

Brandon Arnold
Executive Vice President