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Grassley Seeks Answers from N.C. Hospitals on Discount Drug Program

Press Release

Location: Washington, DC

Sen. Chuck Grassley of Iowa is asking three North Carolina hospitals to explain their use of a federal discount drug program after news reports described how the hospitals charge their patients a big mark-up on certain drugs, such as cancer-fighting drugs.

"The discount drug program is meant to help the poorest, uninsured patients," Grassley said. "It's not meant to subsidize other hospital services and build up hospital surpluses. If hospitals aren't passing drug savings on to patients, they're abusing the system. They're also abusing the taxpayers, including those who already subsidize the massive tax breaks given to tax-exempt hospitals. I'm looking for some answers about program use."

Grassley wrote to Carolinas Medical Center, University of North Carolina Hospital, and Duke University Health System about their participation in the federal 340B program. The 340B program is meant to help the poorest, uninsured patients who receive treatment through entities including hospitals, qualified health centers, and children's hospitals. The program is meant to lower outpatient drug prices for the uninsured.

Increasingly, the program is under scrutiny as it gains popularity. In a September 2011 report, the Government Accountability Office (GAO) noted an inadequate level of oversight by the Health Resources and Services Administration and a lack of necessary direction on program requirements. Of greatest concern to Grassley is the GAO finding that "the 340B program has increasingly been used in settings, such as hospitals, where the risk of improper purchase of 340B drugs is greater." "As the improper use of the 340B program increases, so does the financial liability to the federal government," Grassley said.

The letters to the North Carolina hospitals are Grassley's latest effort to learn more about use of the 340B program.

In March, Grassley and three other senators and a member of the House of Representatives asked a wide range of stakeholders for a detailed accounting of how they operate the 340B program.

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