K-STREET, 10,000 FEET: Sen. Cassidy's plan to reform hospitals lauded by industry experts, conservatives

THE LOWDOWN:

• Sen. Bill Cassidy (R., La.), a physician by trade and the chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, unveiled a report just in time for congressional reconciliation.

• Cassidy’s report showcases rampant abuse in a controversial program that was initially intended to help hospitals get discounted prescription medication to lower-income patients.

• Gentry Collins, the CEO of the American Free Enterprise Chamber of Commerce, noted to the Reporter that “340B is the perfect example of Washington dysfunction” due to “its lack of transparency and potential for abuse.”

• More broadly, economists like Steve Forbes caution that “there is no transparency or accountability for how 340B hospitals spend the windfall they take in from government-dictated discounts.”

Sen. Bill Cassidy (R., La.), a physician by trade and the chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, unveiled a report just in time for congressional reconciliation.

Cassidy’s report showcases rampant abuse in a controversial program that was initially intended to help hospitals get discounted prescription medication to lower-income patients.

The 340B program, Cassidy’s report found, does not always “truly benefit low-income and uninsured patients, with some studies suggesting that the 340B benefit does not translate into increased care or lower costs for vulnerable populations.”

Among Cassidy’s high-profile findings were that “Bon Secours Mercy Health and Cleveland Clinic, both hospital covered entities, generated hundreds of millions of dollars in 340B revenue, but do not pass 340B discounts directly to their patients.”

“They also differ on how patients receive discounts on their 340B drugs. Additionally, these hospitals report using 340B revenue on ‘capital improvement projects’ and ‘community benefit programs,’ but do not account for what specific expenses 340B revenue goes towards,” the report reads.

This, health care experts told the Washington Reporter, isn’t necessarily surprising.

“This report confirms that hospitals and pharmacy benefit managers are exploiting the 340B program while providing little to no benefit to patients,” Terry Wilcox, the co-founder at Patients Rising, said. “We commend Chairman Bill Cassidy for standing up for patients and working to bring transparency to the broken 340B program.”

Gentry Collins, the CEO of the American Free Enterprise Chamber of Commerce, noted to the Reporter that “340B is the perfect example of Washington dysfunction” due to “its lack of transparency and potential for abuse.”

“We applaud Chairman Cassidy for shining a light on the waste, fraud, and abuse in the system, which, combined with President Trump’s executive order to lower drug prices, highlights the urgency for comprehensive federal reform,” Collins added. “Let’s hope they get it done.”

Despite the stated intentions of the 340B program, hospitals across America take advantage of it. Ryan Long, a Senior Research Fellow at Paragon Health Institute, explained that the program was billed until around 2010 as a program that would help poor urban and rural hospitals “to be able to provide discounted drugs to uninsured patients without them having to cover the full [cost],” but that since then, it has “morphed into…a subsidy for hospitals.”

Ken Blackwell, the former Treasurer and Secretary of State of Ohio, noted that despite Cleveland Clinic’s status as a non-profit hospital, it “pulled in $11.7 billion in total revenues through Q3 2024, and has amassed a dizzying $16.6 billion in net assets.”

More broadly, economists like Steve Forbes caution that “there is no transparency or accountability for how 340B hospitals spend the windfall they take in from government-dictated discounts.”

“As a result, drug prices are driven higher,” Forbes said.

The timing of Cassidy’s report could help Republicans, who are eager to slash wasteful spending across sectors of the American economy.

One former employee at a hospital that used the 340B program accused the health system of “basically laundering money through this poor hospital to its wealthy outposts.”

Some suggest to the Reporter that the Department of Government Efficiency (DOGE) should look at this program as well.