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Grassley: N.C. Hospitals Draw Attention to Concerns in Discount Drug Program

Press Release

Location: Washington, DC

Sen. Chuck Grassley of Iowa disclosed the results of his inquiry into a discount prescription drug program, known as 340B, used by three N.C. hospitals to the federal agency in charge of overseeing the program, showing how the hospitals appear to be making sizeable profits from the program at the expense of Medicare, Medicaid and private health insurance. Grassley asked the federal agency, the Health Resources and Services Administration, to explain its oversight of the program.

"These numbers paint a very stark picture of how hospitals are reaping sizeable 340B discounts on drugs and then turning around and upselling them to fully insured patients to maximize their spread," Grassley said. "If "non-profit' hospitals are essentially profiting from the 340B program without passing those savings to their patients, then the 340B program is not functioning as intended."

The 340B program requires drug manufacturers to give deep discounts on certain outpatient drugs to hospital that serve large numbers of uninsured and under-insured patients.

Information provided to Grassley by Duke University Hospital, University of North Carolina Hospitals in Chapel Hill and Carolinas Medical Center in Charlotte shows those hospitals appear to be making sizeable profits from the program.

"If hospitals are charging Medicare more than they paid for a drug, they're squeezing Medicare and ultimately the taxpayers," Grassley said. "Congress and the federal agency in charge have to get a better handle on where this program is failing and fix the problems for the benefit of the health care system. The ultimate question Congress and HRSA need to face is, do we want discounted drugs going to the uninsured and underinsured or to pad hospitals' bottom line?"

Grassley requested information from the three North Carolina hospitals last September in response to reporting from The News & Observer and The Charlotte Observer. The newspapers found that large nonprofit hospitals were raising their prices on chemotherapy drugs while cornering more of the market on treating cancer.

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