Sen. Grassley Targets Duke, UNC, Carolinas Hospitals for Use of Discount Drug Program

Sen. Chuck Grassley (R-Iowa) is questioning whether Duke University Hospital, Carolinas Medical Center and UNC Hospitals improperly used a discount drug program to maximize profits, according to a Charlotte Observer report.

The 340B drug pricing program provides outpatient drugs at reduced prices to covered healthcare facilities that treat a large number of low-income patients. The program is administered by the Office of Pharmacy Affairs, which is overseen by the Health Resources and Services Administration under HHS.

Sen. Grassley said he's obtained information from all three hospitals that prompts questions about whether the 340B program is working. For example, Duke University Hospital purchased drugs through the discount program for $65.8 million last year and then sold those drugs to patients for $135.5 million. The hospital's profit of $69.7 million would have been $21.4 million if it did not purchase the prescriptions under the 340B program, according to the report.

"If 'non-profit' hospitals are essentially profiting from the 340B program without passing those savings to its patients, then the 340B program is not functioning as intended," Sen. Grassley wrote in a letters to the hospitals, according to the report.

He also wrote a letter to the administrator of HRSA last week, saying the federal agency has "conducted virtually no oversight" of the program.

All three hospitals or their affiliated systems have responded to the senator's questions. Their complete statements, and financial information regarding the 340B program, can be viewed in full at The Charlotte Observer. (Sen. Grassley has allowed CMC until Friday to provide its 340B revenue figures to compare with those from Duke and UNC Hospitals, according to the report.)

Duke University Health System (Durham, N.C.): "While it is not relevant to speak in terms of 'profits' at a non-profit institution, it is certainly the case that the revenues generated through the 340B program are important to supporting our non-profit patient care mission, including our ability to provide a substantial amount of charity care and community benefit for low income and uninsured populations."

Carolinas HealthCare System (Charlotte, N.C.): "CMC passes the 340B savings on to community clinic patients by charging only $0 to $10 for prescriptions dispensed from the community clinic in-house pharmacies. CMC does not raise the prices, even though the in-house pharmacies operate at an annual deficit of $9.8 million."

UNC Health Care (Chapel Hill, N.C.): "The growth in the program at UNC Health Care is a result of drug cost inflation, which has been reported nationwide, and our significant outpatient volume growth — 1.3 million in [fiscal year 2012], up from less than 950,000 in [fiscal year 2009]."

More Articles on Non-Profit Hospitals and Sen. Grassley:

GOP Lawmakers Question HHS' $23.2M Grants for Malpractice Reform
Sen. Grassley Probes Drug Programs at Duke, UNC, Carolinas
U.S. Senators Call for Federal Investigation Into State Boards' Action on Physicians

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