[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]




 
  EXAMINING HOW COVERED ENTITIES UTILIZE THE 340B DRUG PRICING PROGRAM

=======================================================================

                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 11, 2017

                               __________

                           Serial No. 115-63
                           
                           
                           
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                          
                           


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov
                        
                        
                            _________ 

                U.S. GOVERNMENT PUBLISHING OFFICE
                   
27-577                  WASHINGTON : 2019                             
                        
                        
                        
                    COMMITTEE ON ENERGY AND COMMERCE

                          GREG WALDEN, Oregon
                                 Chairman
JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Vice Chairman                        Ranking Member
FRED UPTON, Michigan                 BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
TIM MURPHY, Pennsylvania             ELIOT L. ENGEL, New York
MICHAEL C. BURGESS, Texas            GENE GREEN, Texas
MARSHA BLACKBURN, Tennessee          DIANA DeGETTE, Colorado
STEVE SCALISE, Louisiana             MICHAEL F. DOYLE, Pennsylvania
ROBERT E. LATTA, Ohio                JANICE D. SCHAKOWSKY, Illinois
CATHY McMORRIS RODGERS, Washington   G.K. BUTTERFIELD, North Carolina
GREGG HARPER, Mississippi            DORIS O. MATSUI, California
LEONARD LANCE, New Jersey            KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky              JOHN P. SARBANES, Maryland
PETE OLSON, Texas                    JERRY McNERNEY, California
DAVID B. McKINLEY, West Virginia     PETER WELCH, Vermont
ADAM KINZINGER, Illinois             BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia         PAUL TONKO, New York
GUS M. BILIRAKIS, Florida            YVETTE D. CLARKE, New York
BILL JOHNSON, Ohio                   DAVID LOEBSACK, Iowa
BILLY LONG, Missouri                 KURT SCHRADER, Oregon
LARRY BUCSHON, Indiana               JOSEPH P. KENNEDY, III, 
BILL FLORES, Texas                       Massachusetts
SUSAN W. BROOKS, Indiana             TONY CARDENAS, California
MARKWAYNE MULLIN, Oklahoma           RAUL RUIZ, California
RICHARD HUDSON, North Carolina       SCOTT H. PETERS, California
CHRIS COLLINS, New York              DEBBIE DINGELL, Michigan
KEVIN CRAMER, North Dakota
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia

              Subcommittee on Oversight and Investigations

                        TIM MURPHY, Pennsylvania
                                 Chairman
H. MORGAN GRIFFITH, Virginia         DIANA DeGETTE, Colorado
  Vice Chairman                        Ranking Member
JOE BARTON, Texas                    JANICE D. SCHAKOWSKY, Illinois
MICHAEL C. BURGESS, Texas            KATHY CASTOR, Florida
SUSAN W. BROOKS, Indiana             PAUL TONKO, New York
CHRIS COLLINS, New York              YVETTE D. CLARKE, New York
TIM WALBERG, Michigan                RAUL RUIZ, California
MIMI WALTERS, California             SCOTT H. PETERS, California
RYAN A. COSTELLO, Pennsylvania       FRANK PALLONE, Jr., New Jersey (ex 
EARL L. ``BUDDY'' CARTER, Georgia        officio)
GREG WALDEN, Oregon (ex officio)
  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. H. Morgan Griffith, a Representative in Congress from the 
  Commonwealth of Virginia, opening statement....................     1
    Prepared statement...........................................     3
Hon. Diana DeGette, a Representative in Congress from the state 
  of Colorado, opening statement.................................     4
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, opening statement......................................     6
    Prepared statement...........................................     7
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     9

                               Witnesses

Sue Veer, President and Chief Executive Officer, Carolina Health 
  Centers, Inc...................................................    11
    Prepared statement...........................................    13
Michael Gifford, President and Chief Executive Officer, Aids 
  Resource Center of Wisconsin...................................    26
    Prepared statement...........................................    28
Ronald A. Paulus, M.D., President and Chief Executive Officer, 
  Mission Health.................................................    52
    Prepared statement...........................................    54
    Answers to submitted questions...............................   143
Charles Reuland, Executive Vice President and Chief Operating 
  Officer, The Johns Hopkins Hospital............................    79
    Prepared statement...........................................    81
    Answers to submitted questions...............................   152
Shannon Banna, Director of Finance And System Controller, 
  Northside Hospital, Inc........................................    87
    Prepared statement...........................................    89
    Answers to submitted questions...............................   179

                           Submitted Material

Subcommittee memorandum..........................................   131




  EXAMINING HOW COVERED ENTITIES UTILIZE THE 340B DRUG PRICING PROGRAM

                              ----------                              


                      WEDNESDAY, OCTOBER 11, 2017

                  House of Representatives,
      Subcommittee on Oversight and Investigations,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:00 a.m., in 
room 2123 Rayburn House Office Building, Hon. Morgan Griffith 
(vice chairman of the subcommittee) presiding.
    Members present: Representatives Griffith, Burgess, Brooks, 
Collins, Walberg, Walters, Costello, Carter, Walden (ex 
officio), DeGette, Schakowsky, Castor, Tonko, Clarke, Ruiz, 
Peters, and Pallone (ex officio).
    Also present: Representative Sarbanes.
    Staff present: Jennifer Barblan, Chief Counsel, Oversight & 
Investigations; Adam Buckalew, Professional Staff Member, 
Health; Kelly Collins, Staff Assistant; Zachary Dareshori, 
Staff Assistant; Adam Fromm, Director of Outreach and 
Coalitions; Ali Fulling, Legislative Clerk, Oversight & 
Investigations, Digital Commerce and Consumer Protection; 
Theresa Gambo, Human Resources/Office Administrator; Brighton 
Haslett, Counsel, Oversight & Investigations; Brittany Havens, 
Professional Staff, Oversight & Investigations; Katie McKeogh, 
Press Assistant; Alex Miller, Video Production Aide and Press 
Assistant; Jennifer Sherman, Press Secretary; Sam Spector, 
Policy Coordinator, Oversight & Investigations; Josh Trent, 
Deputy Chief Health Counsel, Health; Natalie Turner, Counsel, 
Oversight & Investigations; Hamlin Wade, Special Advisor, 
External Affairs; Christina Calce, Minority Counsel; Jeff 
Carroll, Minority Staff Director; Tiffany Guarascio, Minority 
Deputy Staff Director and Chief Health Advisor; Chris Knauer, 
Minority Oversight Staff Director; Miles Lichtman, Minority 
Policy Analyst; Kevin McAloon, Minority Professional Staff 
Member; Rachel Pryor, Minority Senior Health Policy Advisor; 
Andrew Souvall, Minority Director of Communications, Outreach 
and Member Services; and C.J. Young, Minority Press Secretary.

OPENING STATEMENT OF HON. H. MORGAN GRIFFITH, A REPRESENTATIVE 
         IN CONGRESS FROM THE COMMONWEALTH OF VIRGINIA

    Mr. Griffith. Welcome. Today the subcommittee is holding a 
hearing entitled Examining How Covered Entities Utilize the 
340B Drug Pricing Program. The 340B Program was created by 
Congress in 1992 and mandates that drug manufacturers provide 
outpatient drugs to eligible entities at reduced prices in 
order for the manufacturers to remain eligible for 
reimbursements through entitle programs such as Medicaid and 
Medicare.
    The 340B Program helps covered entities stretch scarce 
federal resources in order to reach more eligible patients and 
provide more comprehensive services to those patients. This is, 
undoubtedly, an important program. The dramatic growth of the 
program, however, coupled with a dearth of information about 
how it is used, has led to questions about whether the program 
has grown beyond Congress' original intent.
    The Subcommittee on Oversight and Investigations has been 
looking into the 340B program for several months now. Our work 
began with an examination of the Health Resources and Services 
Administration's, HRSA, role in overseeing the 340B Program. 
The committee requested a sample of HRSA's audits in order to 
understand the interactions between HRSA and covered entities 
and the thoroughness of HRSA's audits.
    In July, the subcommittee held a hearing in which we heard 
from HRSA, GAO, and OIG on the challenges they face in 
overseeing the program. As we heard in July, the number of 
unique participating entities nearly quadrupled between 2011 
and 2016 without a proportional growth in oversight and HRSA 
has struggled to keep up. However, our last hearing left many 
questions unanswered.
    Because of the lack of reporting requirements in the 340B 
statute, HRSA is simply unable to collect data on exactly how 
covered entities use the program. Because HRSA is not able to 
report how covered entities use the program, the committee 
wrote to a diverse group of entities in September about their 
use of the program. We asked the entities to report a wide 
range of information, including the amount saved on drug 
purchases through participation in the 340B program, the level 
and type of charity of care provided by the entities, and how 
patients benefit from 340B discounts.
    Over the past few months, we have heard from these entities 
and many others. Some entities reached out to the committee on 
their own, very eager to share with us the great work they are 
doing with the program dollars. We have heard from rural 
entities that started delivery services to ensure that patients 
in remote areas are able to receive their medications, entities 
that pass savings directly to their patients using a cash card 
program, and entities that are using their savings to combat 
the opioid crisis, including by examining prescribing practices 
and providing behavioral health services to their communities. 
However, I am concerned by reports that not all participating 
entities have devoted the program dollars to improving patient 
care, providing access to vital services, or lowering 
prescription drug costs for the patients. I have seen news 
accounts indicating that some covered entities spend millions 
on salaries and bonuses for their CEOs and hundreds of millions 
on building expansions, even as charity care at those entities 
is on the decline. Perhaps even more concerning are some 
reports showing that patient costs are actually on the rise at 
some 340B entities.
    In 2015, GAO found the 340B disproportionate share 
hospitals were either prescribing more drugs or more expensive 
drugs to Medicare Part B beneficiaries than their non-340B 
counterparts. Similarly, we have concerns that 340B hospitals 
are acquiring physician-owned oncology practices which can 
result in higher treatment costs to patients within that 
practice.
    The 340B drug pricing program is vital to many covered 
entities and, by extension, to the patients that those entities 
serve. As such, it is crucial that Congress ensure that the 
program dollars used in accordance with the intent of the 
program to stretch scarce federal resources as far as possible 
to better serve uninsured and underinsured patients. We must 
ensure there is accountability and transparency in the program.
    I am pleased that the panel we have assembled today 
includes three disproportionate share hospitals that serve both 
urban and rural populations, one Federally-Qualified Health 
Center, and one Ryan White Center. Each of these entities serve 
a different patient population and offer services that are of 
particular importance to their communities.
    I thank these witnesses for their cooperation in producing 
data, to this committee about their use of the 340B program, 
and their willingness to appear before us today.
    I look forward to hearing more about the ways in which they 
benefit and, more importantly, how their patients benefit from 
their participation in the 340B program.
    I do appreciate it very much. And with that, I will yield 
to Ms. DeGette for 5 minutes.
    [The prepared statement of Mr. Griffith follows:]

             Prepared statement of Hon. H. Morgan Griffith

    Today, the Subcommittee is holding a hearing entitled 
``Examining How Covered Entities Utilize the 340B Drug Pricing 
Program.'' The 340B program was created by Congress in 1992 and 
mandates that drug manufacturers provide outpatient drugs to 
eligible entities at reduced prices in order for the 
manufacturers to remain eligible for reimbursements through 
entitlement programs such as Medicaid and Medicare.
    The 340B program helps covered entities ``stretch scarce 
federal resources'' in order to reach more eligible patients 
and provide more comprehensive services to those patients. This 
is undoubtedly an important program. The dramatic growth of the 
program, however, coupled with a dearth of information about 
how it is used, has led to questions about whether the program 
has grown beyond Congress' original intent.
    The Subcommittee on Oversight and Investigations has been 
looking into the 340B program for several months now. Our work 
began with an examination of the Health Resources and Services 
Administration's (HRSA) role in overseeing the 340B program. 
The Committee requested a sample of HRSA's audits in order to 
understand the interactions between HRSA and covered entities, 
and the thoroughness of HRSA's audits. In July, the 
subcommittee held a hearing in which we heard from HRSA, GAO, 
and OIG on the challenges they face in overseeing the program.
    As we heard in July, the number of unique participating 
entities nearly quadrupled between 2011 and 2016 without a 
proportional growth in oversight, and HRSA has struggled to 
keep up. However, our last hearing left many questions 
unanswered. Because of the lack of reporting requirements in 
the 340B statute, HRSA is simply unable to collect data on 
exactly how covered entities use the program.
    Because HRSA is not able to report how covered entities use 
the program, the committee wrote to a diverse group of entities 
in September about their use of the program. We asked the 
entities to report a wide range of information, including the 
amount saved on drug purchases through participation in the 
340B program, the level and type of charity care provided by 
the entities, and how patients benefit from 340B discounts.
    Over the past few months, we have heard from these entities 
and many others. Some entities reached out to the committee on 
their own, very eager to share with us the great work they are 
doing with the program dollars. We've heard from rural entities 
that started delivery services to ensure that patients in 
remote areas are able to receive their medications, entities 
that pass savings directly to their patients using a cash card 
program, and entities that are using their savings to combat 
the opioid crisis, including by examining prescribing practices 
and providing behavioral health services to their communities.
    However, I am concerned by reports that not all 
participating entities have devoted the program dollars to 
improving patient care, providing access to vital services, or 
lowering prescription drug costs for patients. I've seen news 
accounts indicating that some covered entities spend millions 
on salaries and bonuses for their CEOs, and hundreds of 
millions on building expansions, even as charity care at those 
entities is on the decline. Perhaps even more concerning are 
some reports showing that patient costs are actually on the 
rise at some 340B entities.
    In 2015, GAO found that 340B Disproportionate Share 
Hospitals ``were either prescribing more drugs, or more 
expensive drugs'' to Medicare Part B beneficiaries than their 
non-340B counterparts prescribed. Similarly, we have heard 
concerns that 340B hospitals are acquiring physician-owned 
oncology practices, which can result in higher treatment costs 
to patients within that practice.
    The 340B Drug Pricing Program is vital to many covered 
entities, and by extension, to the patients that those entities 
serve. As such, it is crucial that Congress ensure that the 
program dollars are used in accordance with the intent of the 
program to stretch scarce federal resources as far as possible 
to better serve uninsured and underinsured patients. We must 
ensure there is accountability and transparency in the program.
    I'm pleased that the panel we've assembled today includes 
three Disproportionate Share Hospitals that serve both urban 
and rural populations, one Federally Qualified Health Center, 
and one Ryan White Center. Each of these entities serve a 
different patient population, and offer services that are of 
particular importance to their communities.
    I thank these witnesses for their cooperation in producing 
data to this Committee about their use of the 340B program and 
their willingness to appear before us today. I look forward to 
hearing more about the ways in which they benefit, and more 
importantly, how their patients benefit, from their 
participation in the 340B Program.

 OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF COLORADO

    Ms. DeGette. Thank you. Chairman, it is nice to see you 
sitting there in the chair. Welcome. We are glad to have you.
    I think that investigations like this, of programs like 
this, really are the core job of this committee and I am 
pleased that we are looking into the viability of the 340B 
Program. This program, I think we will all agree on both sides 
of the aisle, has been a lifeline for providers who care for 
low-income and vulnerable patients. Eligible entities like DSH 
hospitals, Federally-Qualified Health Centers and AIDS Drug 
Assistance Program are a critical part of the communities that 
they serve. The 340B Program helps them to make the best of 
their limited resources.
    When we talk about the 340B Program, we often hear about 
the drug discounts but the program provides so much more than 
that. When Congress established this program, we made clear 
that the purpose was to quote stretch scarce federal resources 
as far as possible, reaching more eligible patients, and 
providing more comprehensive services.
    Mr. Chairman, it seems like the providers are doing just 
that. 340B recipients include large hospitals that serve urban 
settings and rural hospitals that often provide the only care 
available in their communities. They include Ryan White Clinics 
and Federally-Qualified Health Centers. All of these centers 
provide extraordinary amounts of uncompensated care and 
services to those in need.
    Now this investigation was initiated to see whether 
recipients were properly using their savings and that is 
certainly appropriate. So we received responses from most of 
the people who received a letter from the Majority Council. As 
part of that process, my committee staff has also conducted 
interviews with most of them as well. While most of the 
recipients have reported that the 340B Program is a vital 
source of funding that makes possible to reach vulnerable 
populations, many have also explained that these savings only 
cover a fraction of the care that they provide.
    For example, as a covered entity, the University of 
Washington saved $24 million through the 340B Program. Well, 
that is impressive but the institution spent more than $270 
million covering uncompensated care costs for Medicaid and 
Medicare recipients, as well as people who show up at the 
emergency room with no insurance at all.
    Mission Health, which has a witness which will testify 
today, saved $38 million in 2016 by participating in the 340B 
program but that same year, it provided $69 million in 
uncompensated care, as well as $183 million in community 
benefits. This includes services like mobile children's dental 
care units, a medical airlift service for surrounding states.
    In an interview with committee staff, Mission Health 
reported that if its 340B revenues were cut, it would be forced 
to significantly limit programs and services.
    Parkland Hospital in Dallas provided $431 million in 
charity care in 2016, which was over three times the amount of 
their 340B discounts. Parkland explained to my committee staff 
that when all uncompensated care is taken into account, it 
actually provided $870 million in critical community benefits.
    Northside Hospital in Atlanta, which also has a witness 
here today, reported in 2016 that it generated nearly $53 
million in 340B savings, which does cover a lot of care, but 
there was nearly $370 million in charity care.
    And UCSF saved about $83 million but, again, that savings 
only covered a portion of the $331 million in charity care.
    Last but certainly not least, the AIDS Research Center of 
Wisconsin, which recently merged with Rocky Mountain CARES in 
my home district. These clinics provide critical services to 
people affected by HIV-AIDS--medical, dental, mental health 
care, food services, housing services, and pharmacy services. 
If they didn't have 340B, they couldn't provide these services.
    We heard this consistent message from all types of 
providers and, from what this committee has seen, they don't 
seem to be lining their pockets. They are using this savings to 
provide critical care for the community and vulnerable 
populations.
    Now I think we can discuss the definitions regarding what 
is what or what is not charity care but, in the end, what 
should not be lost is these organizations are using this 
compensation for important community work.
    I look forward to hearing from the witnesses about this 
work. I think we can make improvements on transparency to the 
program but, in doing so, we should not reduce the providers' 
abilities to fulfill their missions and to continue their 
important work.
    I yield back.
    Mr. Griffith. I thank the gentlelady and now recognize the 
chairman of the full committee, Mr. Walden.

  OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF OREGON

    Mr. Walden. And I thank you, Vice Chairman. Thank you for 
leading this hearing today.
    The committee has been examining the 340B Drug Pricing 
Program for about 2 years now, as I think you all know, and the 
Oversight Subcommittee has been particularly focused on it 
since last spring.
    The 340B Drug Pricing Program allows covered entities to 
purchase certain outpatient drugs at reduced prices, in order 
to allow those entities to stretch scarce federal resources as 
far as possible to better serve their patients.
    As you all know, the subcommittee held a hearing in July. 
We invited government witnesses here to testify about the 
program. They were unable to answer many of our questions on 
how covered entities use the 340B program, due to the lack of 
reporting requirements in the statute. This lack of 
transparency and coherent reporting requirements is concerning. 
Frankly, without the data it is hard to know if this program is 
working as Congress intended when it was created.
    So today, we are going to hear directly from five covered 
entities, all top-notch medical organizations that provide 
important services to their communities. They range from 
smallest to some of the largest participants in the program.
    The 340B Program enables covered entities to do some real 
good in our communities, to extend care to underserved 
populations, to create programs that serve specific community 
needs, and to provide life-saving drugs at discounted prices to 
the populations that need them the most. For some entities, 
this program is the difference in keeping their doors open or 
in closing shop, which could result in a loss of care to 
vulnerable populations. So this is a very important program.
    I have met with several hospitals in rural Oregon that are 
using the 340B Program to improve care and reduce costs for 
low-income patients and I have heard how vital this program is 
to maintain their high levels of charity care. I, myself, 
served on a nonprofit small community hospital board for about 
4 years before coming to the Congress. So, I understand the 
importance of these programs. I am troubled, however, by the 
response of some stakeholders and entities who see our 
oversight efforts as a threat to the 340B Program and to their 
charity work. It is the job of this committee to ensure that 
the programs that Congress creates serve their intended purpose 
and operate with integrity and that participating entities are 
held accountable for how they spend the program dollars. That 
is our job.
    Our goal in our oversight work is always to take a 
deliberate and fair look at all sides of the issues. We know 
that each entity provides unique services, serves a unique 
population and faces unique challenges in their communities. 
Because of that diversity, we want to allow entities to tell 
their own stories and highlight the successes they have 
experienced through participation in this important program. 
However, the lack of transparency requirements has resulted in 
inconsistent data and dueling reports from every side of this 
issue. And believe me, we hear from every side.
    Much of the data that we do have is self-reported by 
entities that measure charity care and program savings but they 
do so in various ways. While I believe it is important that 
entities be able to share their work in a way that takes into 
account the specific needs of their communities, the 
inconsistencies here only further demonstrate that we need 
better data on this program.
    The 340B Program has grown rapidly over the years. The 
increase in program participation has led to a dramatic 
increase in 340B drug purchasing and savings. According to 
HRSA, covered entities' drug savings grew from $3.8 billion in 
fiscal year 2013 to $6 billion dollars in fiscal year 2015. I 
am concerned that, as the program continues to grow, 
participating entities are not investing the necessary 
resources and time to oversee the program, ensure 
accountability and transparency, and, above all, ensure that 
they are using the program savings to improve patient care.
    For example, some entities that we spoke with reported they 
do not have policies to help ensure that uninsured and 
underinsured patients directly benefit from the program by 
receiving discounts on out-patient drugs. Most surprisingly, 
many entities did not track their 340B savings at all and, 
until they received our request, didn't seem to have any idea 
how much they saved through participation in the 340B Program.
    On the other hand, some participating entities tracked 
their 340B savings on a regular basis and provide regular 
training to staff on federal program requirements.
    With a program this large, it is essential that Congress 
understands how it is being used and I hope that that is what 
we will accomplish in this hearing. Our goal today is to 
develop a better understanding of how much money different 
entities saved through participation in the 340B program, how 
covered entities tracked their savings, and how those savings 
are used to actually improve patient care in various ways.
    So I want to thank each of the witnesses for being here 
today and I look forward to hearing more about how each of your 
organizations provides vital care to your communities. And know 
that I have said from day one, Mr. Chairman, we are going to 
look from one end of the cost curve of healthcare delivery to 
the other. It is our job and responsibility. It just happened 
340B and hospitals were first up but this is just the start. If 
we are ever going to tackle high cost of health care in 
America, it is our responsibility.
    With that, I yield back, Mr. Chairman.
    [The prepared statement of Mr. Walden follows:]

                 Prepared statement of Hon. Greg Walden

    The Committee has been examining the 340B Drug Pricing 
program for about 2 years now, and the Oversight Subcommittee 
has been particularly focused on it since last spring.
    The 340B Drug Pricing program allows covered entities to 
purchase certain outpatient drugs at reduced prices, in order 
to allow those entities to stretch scarce federal resources as 
far as possible to better serve their patients.
    The subcommittee held a hearing in July in which government 
witnesses were unable to answer many of our questions about how 
covered entities use the 340B program due to the lack of 
reporting requirements in the statute. This lack of 
transparency and coherent reporting requirements is concerning. 
Frankly, without the data, it is hard to know if this program 
is working as Congress intended.
    Today, we will hear directly from five covered entities-all 
top-notch medical organizations that provide important services 
to their communities. They range from some of the smallest to 
some of the largest participants in the program.
    The 340B program enables covered entities to do some real 
good in our communities: to extend care to underserved 
populations, to create programs that serve specific community 
needs, and to provide life-saving drugs at discounted prices to 
the populations that need them the most. For some entities, 
this program is the difference in keeping their doors open or 
closing shop, which could result in a loss of care to 
vulnerable populations.
    I have met with several hospitals in rural Oregon that are 
using the 340B program to improve care and reduce costs for 
low-income patients, and heard how vital this program is to 
maintaining their high levels of charity care.
    However, I am troubled by the response of some stakeholders 
and entities who see our oversight efforts as a threat to the 
340B program and to their charity work. It is the job of this 
committee to ensure that the programs that we create serve 
their intended purpose and operate with integrity, and that 
participating entities are held accountable for how they spend 
program dollars.
    Our goal in our oversight work is always to take a 
deliberate and fair look at all sides of an issue. We know that 
each entity provides unique services, serves a unique 
population, and faces unique challenges in their communities. 
Because of that diversity, we want to allow entities to tell 
their own stories and highlight the successes they've 
experienced through participation in this important program.
    However, the lack of transparency requirements has resulted 
in inconsistent data and dueling reports from every side of the 
issue. Much of the data that we do have is self-reported by 
entities that measure charity care and program savings in 
various ways. While I believe it is important that entities be 
able to share their work in a way that takes into account the 
specific needs of their communities, the inconsistencies here 
only further demonstrate that we need better data on this 
program.
    The 340B program has grown rapidly over the years. The 
increase in program participation has led to a dramatic 
increase in 340B drug purchasing and savings. According to 
HRSA, covered entities' drug savings grew from $3.8 billion in 
fiscal year 2013 to $6 billion in fiscal year 2015.
    I am concerned that as the program continues to grow, 
participating entities are not investing the necessary 
resources and time to oversee the program, ensure 
accountability and transparency, and--above all--ensure that 
they are using program savings to improve patient care.
    For example, some entities that we spoke with reported they 
do not have policies to help ensure that uninsured and 
underinsured patients directly benefit from the program by 
receiving discounts on outpatient drugs.
    Most surprisingly, many entities did not track their 340B 
savings at all and, until they received our request, didn't 
seem to have any idea how much they saved through participation 
in the 340B program. On the other hand, some participating 
entities track their 340B savings on a regular basis and 
provide regular training to staff on program requirements.
    With a program this large, it's essential that Congress 
understand how it's being used, and I hope that is what we will 
accomplish in this hearing.
    Our goal today is to develop a better understanding of how 
much money different entities save through participation in the 
340B program, how covered entities track their savings, and how 
those savings are used to improve patient care in various ways.
    I want to thank each of the witnesses for appearing before 
us today, and I look forward to hearing more about how each of 
your organizations provides vital care to your communities.

    Mr. Griffith. Thank you, Mr. Chairman. I appreciate it very 
much.
    I now recognize the ranking member of the full committee, 
Mr. Pallone.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Mr. Chairman.
    Twenty-five years ago, Congress passed bipartisan 
legislation establishing the 340B Program to help healthcare 
providers expand their capacity to serve their patients. And 
since that time, the 340B Program has played a critical role 
ensuring that low-income Americans and most vulnerable 
populations have access to essential healthcare services and 
helping safety net providers expand innovative care to these 
communities.
    This summer, the Republican majority initiated an 
investigation to determine how entities are using the program. 
From what we have heard over the last couple of weeks, it 
appears that 340B recipients are using their savings to reach 
vulnerable populations and without that money, these programs 
would be reduced or cut altogether.
    The committee has reviewed responses from most of the 
healthcare facilities that the Republicans contacted. Committee 
staff have also interviewed representatives from most of the 
letters' recipients. Many entities have explained that the 340B 
savings often cover only a portion of the cost of their 
uncompensated care and services to vulnerable populations. And 
through these interviews and responses, we have found that 
covered entities rely on 340B funds to provide a diverse range 
of essential services to the community. Today, we will hear 
firsthand from our witnesses about the type of care and 
treatment that might be impossible to provide without the help 
of 340B.
    For instance, 340B recipients have told the committee that 
they use their savings to support mobile clinics for low-income 
patients, or to provide free prescriptions to uninsured and 
underinsured patients. One provider reported that 340B savings 
made it possible for them to treat low-income patients with 
substance abuse disorders. Another said that thanks to the 340B 
savings, it is able to serve more vulnerable children in its 
neonatal intensive care unit. And this provider reported that 
without 340B, it might have had to cut the number of children 
it can help by nearly half.
    It is beyond question that the resources provided through 
the 340B program directly augment patient care throughout the 
country. We have consistently heard this message from all types 
and sizes of 340B providers from small AIDS clinics to large 
urban hospitals. And the 340B Program plays an integral role in 
supporting the mission of safety net providers serving low-
income, uninsured, and underinsured patients.
    Now some have suggested that we can improve the program by 
increasing transparency and program integrity. And I certainly 
agree good program integrity strengthens our programs not only 
for today but for the future. But I want to be clear, however, 
that while I am always happy to have a conversation about 
strengthening the 340B program, it is plain from the responses 
we have received that 340B-covered entities are using their 
savings to serve the community and Congress should commend and 
support those efforts.
    So I remain dedicated to finding ways to strengthen the 
340B Program and ensure that it continues to fulfill its vital 
mission.
    And I yield back if someone else wants time but I don't 
think so. I yield back, Mr. Chairman.
    Mr. Griffith. Thank you.
    And now I ask for unanimous consent that the members' 
written opening statements be introduced into the record. 
Without objection, the documents will be entered into the 
record. I also ask unanimous consent that members not on the 
subcommittee on Oversight and Investigations be permitted to 
participate in today's hearing.
    Without objection, I would now like to introduce our panel 
of witnesses for today's hearing. First, we have Ms. Sue Veer, 
who is the President and CEO of Carolina Health Centers in 
South Carolina. Thank you for being here today. Next is Mr. 
Mike Gifford, who serves as the President and CEO of the AIDS 
Resource Center of Wisconsin. Thank you, sir. Then we have Dr. 
Ronald Paulus, who is the President and CEO of Mission Health 
Systems in North Carolina. Fourth is Mr. Charles Reuland, the 
Executive Vice President and COO of Johns Hopkins Hospital in 
Baltimore. Thank you, sir. And finally, we have Ms. Shannon 
Banna, who serves as the Director of Finance and System 
Controller at Northside Hospital in Georgia.
    I thank each of you or being here today and providing 
testimony. We look forward to the opportunity to discuss how 
entities across the country utilize the 340B Program.
    As you are aware, this committee is holding an 
investigative hearing and, when doing so, as has been the 
practice of this subcommittee, we take testimony under oath. Do 
any of you have an objection to testifying under oath?
    The Chair then advises that under the rules of the House 
and the rules of the committee, you are entitled to be advised 
by counsel. Do any of you desire to be advised by counsel 
during your testimony today?
    In that case, if you would please rise and raise your right 
hand, and I will swear you in.
    [Witnesses sworn.]
    Mr. Griffith. Having heard all respond in the affirmative, 
you all can sit. Thanks.
    You are now under oath and subject to the penalties set 
forth in Title 18, Section 1001 of the United States Code. You 
may now give a 5-minute summary of your written statement and, 
of course, we will begin with Ms. Veer.

 STATEMENT OF SUE VEER, PRESIDENT AND CHIEF EXECUTIVE OFFICER, 
 CAROLINA HEALTH CENTERS, INC.; MICHAEL GIFFORD, PRESIDENT AND 
  CHIEF EXECUTIVE OFFICER, AIDS RESOURCE CENTER OF WISCONSIN; 
RONALD A. PAULUS, M.D., PRESIDENT AND CHIEF EXECUTIVE OFFICER, 
 MISSION HEALTH; CHARLES REULAND, EXECUTIVE VICE PRESIDENT AND 
   CHIEF OPERATING OFFICER, THE JOHNS HOPKINS HOSPITAL; AND 
   SHANNON BANNA, DIRECTOR OF FINANCE AND SYSTEM CONTROLLER, 
                    NORTHSIDE HOSPITAL, INC.

                     STATEMENT OF SUE VEER

    Ms. Veer. Thank you, Chairman Griffith, Ranking Member 
DeGette, and members of the subcommittee.
    My name is Sue Veer and I am the President and CEO of 
Carolina Health Centers, a Federally-Qualified Health Center 
that serves as the primary care medical home for 26,952 
patients in the west central portion of South Carolina known as 
the Lakelands. We operate 13 primary care sites and two 
community pharmacies serving patients within an HHS-designated 
medically underserved area of over 3,700 square miles.
    I appreciate the opportunity to serve as a witness before 
the subcommittee today and to speak to the importance of the 
340B Program for Carolina Health Centers. If there are two key 
things that I hope you will take away from my testimony they 
are, first, that the 340B Program is a critically important 
tool for FQHCs as we work to provide the highest quality of 
care to underserved patients and the communities in which our 
sites are located.
    Second, each category of 340B-covered entity has unique 
aspects that must be considered in any potential reforms. In 
the case of FQHCs, we are already subject to HRSA oversight and 
specific health center requirements that guide many aspects of 
our participation in the 340B Drug Pricing Program. Consistent 
with these specific FQHC requirements, we never turn a patient 
away due to inability to pay or due to demographic, geographic, 
and socioeconomic barriers. Patients with incomes before the 
poverty level pay no more than a nominal fee for the full range 
of services that we provide. And patients whose incomes are 
between 101 and 200 percent of the poverty level pay a 
discounted rate according to a sliding fee scale that's based 
on their ability to pay.
    We are also governed by a community-based Board of 
Directors, a majority of whose members are patients of the 
health center. This structure ensures that we remain directly 
responsive to the unique needs of our patients and the 
community.
    And finally, all health centers are subject to intensive 
and ongoing oversight from the Department of Health and Human 
Services Health Resources and Services Administration. The HRSA 
requirements with which we must comply are spelled out in a 92-
page manual and grouped into 18 major categories, which include 
but are not limited to, clinical quality, financial management, 
ensuring access, and our collaboration with other local 
healthcare providers.
    At Carolina Health Centers, we make every effort to ensure 
that uninsured and low-income patients are able to afford their 
prescriptions. While every health center may use their 340B 
savings differently, these savings enable my health center to 
provide deeply discounted pharmacy services to those patients 
eligible for the income-based sliding fee program. Those 
pharmacy services include clinical programs, such as medication 
therapy management, which promote clinical outcomes and cost-
effective care. We are also about to launch a new multi-
disciplinary program for the reduction of the use of controlled 
substances.
    We also use our 340B savings to support the following 
services that are designed to expand access to essential 
primary care services for patients throughout our rural service 
area. Daily delivery of health center patient prescriptions to 
Carolina Health Centers' medical practices that in our outlying 
rural communities, communities where patients have little or no 
access to affordable pharmacy services. That delivery service 
makes over 20,000 affordable prescriptions accessible to low-
income and uninsured patients every year.
    Oral health service, both preventive and restorative 
provided to uninsured and sliding fee-eligible patients through 
a network of contract dentists and behavioral health 
counseling, which is provided on-site for patients who would 
either not qualify or have incredibly long delays in accessing 
care from the local mental health agency.
    In addition, the 340B savings contribute to my health 
center's ability to ensure continued access to primary care and 
preventive care at certain of our primary care delivery sites 
in communities, which due to their particularly rural location 
would not likely be sustainable otherwise.
    The health center statute requires FQHCs to use all their 
340B savings for purposes that advance their HRSA-approved 
scope of project. In other words, for activities that increase 
access to high-quality affordable care for medically-
underserved populations.
    As my testimony demonstrates, the 340B Program is vital to 
my health center and to our ability to provide patients with 
access to affordable prescriptions, as well as needed services 
for our low-income and underserved patients.
    Thank you for the opportunity to testify before you today 
and for recognizing the importance of this program for the 
health centers and all the patients we serve.
    [The prepared statement of Ms. Veer follows:]
    
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    Mr. Griffith. Thank you.
    I now recognize Mr. Gifford for 5 minutes for an opening 
statement.

                  STATEMENT OF MICHAEL GIFFORD

    Mr. Gifford. Good morning, Chairman Griffith, Ranking 
Member DeGette, and members of the subcommittee. Thank you for 
inviting me to provide testimony today.
    As we gather here today, we can talk credibly about the end 
of the HIV epidemic in our lifetime. The 340B Program is vital 
to attaining that goal.
    My name is Mike Gifford. I serve as the President and Chief 
Executive Officer of the AIDS Resource Center of Wisconsin. 
Earlier this year, ARCW expanded our services into Denver, 
Colorado and the unique model of care that we offer. In total, 
we serve more than 4,000 people with HIV.
    The 340B Program costs the Federal Government nothing, yet 
generates hundreds of millions of dollars in care for HIV 
patients. For HIV patients, the purpose of the 340B program, to 
stretch scarce federal resources, to serve more patients, and 
to provide more comprehensive services, is met every single 
day. We assure unfettered access to medical care, dental care, 
mental health therapy, drug treatment, and pharmacy services 
tightly integrated with social services like case management, 
food assistance, and housing. More than 90 percent of our 
patients are low-income and one-third of all of our medical 
visits care for uninsured patients.
    Our patients achieve some of the finest clinical outcomes 
in the country, 89 percent of whom achieve the gold standard in 
HIV health care and undetectable viral load. That is a rate far 
above the national average. Governor Scott Walker's 
administration has found that our patients are so healthy they 
cost of the State of Wisconsin 30 percent less than HIV 
patients cared for elsewhere. Further, DHHS data shows HIV 
patients in Wisconsin have the lowest HIV mortality rate in the 
country. Our HIV medical home buoyed by 340B savings result in 
people with HIV living in Wisconsin longer than anywhere else 
in the country.
    At ARCW, 340B savings are used consistent with legal and 
regulatory requirements. Savings have supported opening an 
opioid treatment program in Green Bay, expanding mental health 
services throughout Wisconsin, launching clinical pharmacy care 
in Denver, and increasing the number of patients we care for 
throughout all of our services by more than one-third.
    Last year, ARCW generated $7,429,666 in savings, the exact 
use of which is included in my written testimony. To track 340B 
medications and savings, we have developed specialized software 
that monitors compliance related to patient eligibility, 
diversion, and duplicate discount. We audit ourselves on a 
monthly basis and have an annual third-party external audit. 
Last year, it showed 99.57 percent compliance. This year our 
compliance rate is at 99.9996 percent.
    As the subcommittee reviews the 340B program, there are 
critically important policies necessary to achieve that goal I 
mentioned earlier, a world without AIDS. The current patient 
definition used for Ryan White grantees must be maintained to 
support the integrated care necessary in achieving 
substantially better clinical outcomes. Without it, there will 
be fewer resources, worse outcomes, and increased healthcare 
costs, not to mention the substantial difficulties for the 
people we serve.
    Separately, the use of 340B savings for Ryan White grantees 
has been limited, prohibiting their use to extend access to: 1) 
lifesaving prep services; 2) expand the number of locations we 
can offer our care; and 3) assure the financial sustainability 
of our providers. These regulations create significant barriers 
to ending AIDS.
    Statistics and advocacy tell only part of the story. 
Briefly, let me tell you about one of our patients, Kathy. She 
came to us newly diagnosed with HIV 20 years ago, struggling 
with substance abuse. Through our drug treatment program, she 
entered a life of sobriety. Kathy then accessed medical care, 
housing, food services, and mental health therapy to achieve 
that gold standard in care in undetectable viral load.
    She proceeded to meet her boyfriend and relocate to another 
town. Just weeks later, we received a call from Ms. Kathy. Her 
boyfriend turned out to be a domestic abuser. We rushed to her 
aid, removed her from harm's way, and provided her a safe home. 
She is no longer being beaten. Sadly, she was no longer 
undetectable.
    Today, she is accessing many of our services and is back on 
the way to that gold standard. Throughout it all, our services 
were always there for Kathy, even if she couldn't pay, each one 
of them supported by 340B savings--savings that saved her life.
    Thank you for this opportunity to testify before the 
committee. I look forward to responding to any questions you 
may have.
    [The prepared statement of Mr. Gifford follows:]
    
    
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    Mr. Griffith. Thank you.
    Now, I yield to Dr. Paulus for 5 minutes for an opening 
statement.

                STATEMENT OF RONALD PAULUS, M.D.

    Dr. Paulus. Vice Chair Griffith, Ranking Member DeGette, 
and members of the subcommittee, on behalf of the nearly one 
million patients and 12,000 Mission Health Care Givers in 
western North Carolina, I would like to thank you for inviting 
me to discuss our participation in the 340B Drug Program.
    I simply cannot overstate the importance of this program in 
enabling what we do. Mission Health is an independent 
community-governed integrated health system providing services 
to the 18 mostly rural and mountainous counties of western 
North Carolina. We've earned numerous awards and achieve 
national recognition, including being named one of the nation's 
top 15 health systems in 5 of the past 6 years by IBM Watson. 
Mission Health is a significant provider of medical education 
and training, serving as a branch campus of the UNC Chapel Hill 
School of Medicine and as a clinical training site for the 
numerous primary care residencies like family practice, OB/GYN, 
general surgery, and psychiatry.
    Our community board members, clinicians, and staff focus 
each and every day on the delivery of compassionate high-
quality care to everyone, without regard to their ability to 
pay. The weight of our safety net responsibility is sometimes 
heavy but it is always real. Our patients are 
disproportionately older, poorer, sicker, and less likely to be 
insured than state and national averages, with nearly 70 
percent covered by Medicare, Medicaid, or having no insurance 
at all.
    Communities in our southern Appalachian Mountains are 
beautiful but they have real challenges. Globalization of 
manufacturing, particularly for furniture, decimated many 
communities. Opioid abuse is an absolute epidemic. Our 
infrastructure is stretched and the rugged terrain of our 
mountainous region adds complexity for patients in getting the 
care that they need. We make difficult decisions every single 
day to keep our regional safety net system viable. The 340B 
Program directly enables those crucial efforts by providing 
savings that we use, yes, to stretch scarce federal resources 
as far as we possibly can. Six Mission Health hospitals 
qualified for the 340B Program, based on either DSH or Critical 
Access Hospital status. Our use of 340B Program savings 
directly reflects the intent of the program. We operate the 
region's only tertiary-quaternary referral center. Mission is 
the sole provider of numerous essential services, including 
being the only Level II trauma center, the only Level III NICU, 
the only open heart program, the only children's hospital, the 
only medevac helicopters, and the list goes on.
    For un- and underinsured patients, Mission Health provides 
robust financial assistance, including completely free care for 
those earning up to twice the federal poverty guidelines on a 
sliding scale up to 300 percent of the federal poverty 
guidelines.
    We have also implemented a novel community investment 
program that identifies and funds external programs that are 
not Mission Health to address the most urgent, underserved 
health needs that serve the uninsured or are either not covered 
by insurance or are not reimbursed at a financially viable 
level. We require for those investments a real business plan, 
metrics, and forecasts as if it were a real investment and we 
are seeing real results.
    In 2016, Mission Health's total value of charity and 
unreimbursed care was nearly $105 million and our total 
community investments exceeded $180 million. In that same year, 
Mission Health generated $37.4 million in 340B savings and this 
year we expect to generate a little more than $38 million. Our 
total charity care, up 20 percent this year over last, and bad 
debt alone is more than double the value of our 340B savings 
and those savings only represent one-fifth of our total 
community benefit provided in the most recent year.
    Now what are some examples? [email protected] This is a walk-in 
urgent care center for those with behavioral health needs that 
we helped fund and create on behalf of the community. The 
Mountain Child Advocacy Center, which supports and treats child 
abuse victims and their families. The Dale Fell Health Center, 
a Federally-Qualified Health Center that provides primary care 
to the most vulnerable in our community with a particular focus 
on homeless families and individuals. The Family Justice 
Center, which provides wraparound services for victims of 
domestic and sexual violence in a trauma-informed setting.
    Other services include our Children's Hospital ToothBus 
Program, 40-foot-long buses that go to schools to provide 
dental care for children and our Medication Assistance Program, 
which is a centralized service for all system hospitals, 
offering patients help with both short- and long-term, and 
discounted medications, one-on-one pharmacist education, and 
help with chronic medical conditions. That program is not 
limited to 340B discounted outpatient drugs and includes a 
Meds-to-Beds Program so people go home with their medications.
    These programs, like many others that we work so hard to 
support are the heart of what safety providers do. So we 
appreciate this opportunity to participate in the dialogue, 
share how the 340B Program impacts our patients and we are 
eager to help you make this important program even better.
    [The prepared statement of Dr. Paulus follows:]
    
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    Mr. Griffith. Thank you very much.
    Mr. Reuland now for a 5-minute opening.

                  STATEMENT OF CHARLES REULAND

    Mr. Reuland. Chairman Griffith, Ranking Member DeGette, and 
members of the subcommittee, my name is Charlie Reuland and I 
am the Executive Vice President and Chief Operating Officer of 
The Johns Hopkins Hospital.
    I began my career at Johns Hopkins in 1990 and have served 
in a variety of roles over the past 3 decades. I have the 
privilege to be the hospital's representative on the panel here 
today to share with you JHH's proud legacy of care and service 
to the vulnerable individuals and families made possible, in 
part, by its participation in the 340B Drug Pricing Program.
    For many, the Johns Hopkins Hospital is synonymous with 
world-class research and care for patients from around the 
nation and world but what sometimes gets lost behind the 
headlines is that we were founded as and continue to be first 
and foremost the local community hospital for the people of 
East Baltimore. For 127 years, the hospital has been rooted in 
Baltimore, still occupying the same square block as the 
original historic hospital which opened in 1889.
    Our history as a participant in the 340B Program is much 
more recent, only since 2002 but the value of the program is 
just as inherent, just as vital to our mission.
    Dr. William Osler, one of the four founding physicians of 
The Johns Hopkins Hospital once said it is much important to 
know what sort of a person has a disease than it is to know 
what sort of a disease a person has. To us, that means that the 
care can be provided best when we understand the life 
circumstances of a patient and adjust our care to optimize the 
results in that overall context. The great strength of the 340B 
Program is the discretion it affords eligible hospitals in 
tailoring the use of program savings to address the unique 
needs of our communities.
    Our ability to invest in interventions both at the patient 
level as well as the community level is critical to our success 
and improving the health of our patients in our community. And 
here is why: In Baltimore, nearly one in four residents live at 
or below the poverty level and the unemployment rate is above 
the national average. Jobs that pay a family's sustaining wage 
are scarce and one in four residents in Baltimore City lives in 
a food desert. JHH tailors the use of its 340B savings with 
these grim realities in mind.
    As a safety-net hospital, we respond to emerging crises, 
provide ongoing care, and disease prevention for the most 
vulnerable patients in Baltimore and invest in improvements in 
our city, all made possible in no small part by the savings 
afforded to us by the 340B program. We have many examples of 
those programs, which I will be glad to tell you more about 
but, in general, they fall into two basic categories of action.
    The first category is providing wraparound support for 
patients when the normal processes of diagnosis and treatment 
may not be enough. Patients returning to homes without running 
water may have greater difficulty following through on 
instructions to keep wound dressings clean and sterile. 
Children with asthma may not be able to avoid secondhand smoke 
that exacerbates their breathing challenges. And a senior will 
have difficulty taking the correct dosage of medication, if 
they can't read the label because of the tiny print.
    Providing wraparound services, such as in-house pharmacy 
visits to assure safe and appropriate use of medications means 
the patient has a greater likelihood of adhering to the 
treatment plan and having a better outcome.
    The second is designing and implementing prevention 
strategy. Picture that proverbial cliff with people sometimes 
falling off. There are ambulances picking up the patients at 
the bottom but people continue to fall. The 340B Program allows 
a hospital to help install a fence at the top of the cliff to 
prevent further falls and, importantly, to tackle the causes of 
disease and disability in our community.
    With 340B savings, Johns Hopkins developed programs for 
expectant mothers in surrounding community, for instance, to 
increase the likelihood of healthy on-time deliveries, rather 
than wait for a low birth weight baby to require a NICU stay.
    These activities are not reimbursed under the traditional 
hospital payment structure, yet they are inherent to our 
mission and are all made possible with the savings of the 340B 
Program.
    The 340B Program has been a success in our community, 
allowing JHH to operate a variety of programs and provide 
services for vulnerable patients that improve their health and 
well-being that otherwise would not be possible. These efforts 
help avoid other, more expensive medical interventions, the 
cost of which would be borne in large part by Federal and state 
governments if not for the 340B Program.
    Now is the time for the Federal Government to recommit to 
the 340B Program. The program is as relevant and vital today as 
it was when first enacted. The legacy of the 340B program is 
that today JHH, along with the national network of other 
Disproportionate Share Hospitals and other 340B-covered 
entities are the bedrock of the national safety net dedicated 
to saving lives and improving the health of our most vulnerable 
neighbors.
    Thank you for the opportunity to provide these comments and 
I look forward to your questions.
    [The prepared statement of Mr. Reuland follows:]
    
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    Mr. Griffith. Thank you, very much.
    And now for a 5-minute opening, Ms. Banna.

                   STATEMENT OF SHANNON BANNA

    Ms. Banna. Good morning, Chairman Griffith, Ranking Member 
DeGette, and members of the subcommittee. My name is Shannon 
Banna and I am here in my capacity as Director of Finance and 
Systems Controller for Northside Hospital. We thank you for the 
opportunity to demonstrate to the subcommittee how Northside 
utilizes the 340B Drug Pricing Program to serve Georgia 
communities.
    The 340B Program is critical in assisting Northside with 
its mission of providing high-quality health care for the 
entire community, regardless of anyone's ability to pay. As 
background, Northside is a nonprofit corporation that owns and 
operates an extensive network of healthcare facilities in 
Georgia. This includes three acute care hospitals, more than 
150 ancillary and physician service sites, and supportive 
services and facilities located throughout Georgia. As one of 
the state's largest and most respected healthcare delivery 
systems, Northside offers a full range of services through over 
2.5 million patient encounters each year.
    As the undisputed national leader in maternity services, 
Northside Hospital Atlanta delivers more babies than any other 
single hospital in the nation. Our neonatal intensive care unit 
treats as many 100 premature and high-level special care babies 
each day.
    Northside Center for Perinatal Medicine offers nationally-
recognized expertise and innovation in maternal fetal medicine 
and diagnostic radiology. We are also one of the largest and 
most respected providers of cancer care in Georgia, diagnosing 
and treating more gynecologic and prostate cancer cases than 
any hospital in Georgia and more breast cancer cases than any 
hospital in the southeast.
    The Northside Blood and Marrow Transplant Program has among 
the highest survival rates in the nation and is recognized as a 
premiere program throughout the southeast.
    The Northside Hospital Cancer Institute is one of only 21 
community cancer programs nationwide selected by the National 
Cancer Institute for participation in the National Cancer 
Institute's Community Oncology Research Program. Selection 
criteria included scope of patient reach and overall 
comprehensive delivery of high-quality patient care.
    Northside treats all patients the same, regardless of 
insurance and regardless of their ability to pay. No patient is 
ever turned away due to the inability to pay for their 
healthcare. In the past 5 years, we have provided almost $1.4 
billion in free or discounted care. In 2016 alone, the system 
provided $370 million in free or discounted care into our 
patient community.
    From 2012 until 2016, Northside Atlanta's provision of 
charity and indigent care grew at a rate 63 percent greater 
than our increase in hospital adjusted gross revenue. During 
the same period, the number of distinct patients receiving 
charity care at Northside Atlanta increased 350 percent.
    This free and discounted care encompasses a wide range of 
service for those in need and makes comprehensive care 
available to a greater number of patients. For example, 
Northside offers free and low-cost educational courses on 
topics related to maternal and infant health, with over 700 
available classes. In 2016, 18,500 individuals accessed 
Northside's free breastfeeding eLearning program. More than 
31,000 women used our free Lactation Support telephone hotline.
    In addition to providing audiology screening for all 
newborns and hearing screenings for many school children, we 
provide numerous free preventative health screenings to adults 
as well, including prostate cancer screening, skin cancer 
screening, and stroke screening.
    Northside also operates a Financial Access Surgery Program 
to provide radiology, cancer, and related surgical services to 
the uninsured and underinsured who are not otherwise able to 
afford medically-necessary outpatient care.
    In recent years, Northside has worked hard to make state-
of-the-art cancer care accessible to more patients in more 
locations. We offer cutting edge oncology drugs to all 
patients, regardless of their ability to pay. We have expanded 
and enhanced oncology care by adding more than 250 full-time 
positions in and in support of our oncology clinics. These 
positions provide services such as financial assistance, 
wellness counseling, nutrition, navigation, clinical research, 
and much more.
    Northside Atlanta qualifies for participation in the 340B 
Program because of our disproportionate share of indigent and 
low-income inpatient days, currently running at approximately 
16 percent of total inpatient days.
    Northside started our 340B Program in 2013 under the 
guidance and oversight of our 340B Steering Committee and then 
independent third-party consultant. In addition to constant 
oversight by the Steering Committee, which encompasses 
individuals from several departments of the hospital, our 340B 
Program undergoes frequent and rigorous internal and external 
auditing and monitoring.
    In 2016, Northside underwent an audit by HRSA, which 
confirmed Northside's compliance with 340B Program 
requirements. Following a thorough review of the 340B Program, 
HRSA found a single instance of inadvertent diversion, 
representing less than $7.
    Northside is proud of our commitment to charity and the 
services we provide to our community, the extent of which is 
made possible through 340B savings. We appreciate the 
opportunity to provide this information and we look forward to 
answering your questions.
    [The prepared statement of Shannon Banna follows:]
    
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    Mr. Griffith. Thank you very much to all of our witnesses. 
At this point, I ask unanimous consent that the contents of the 
document binder be introduced into the record and to authorize 
staff to make any appropriate redactions.
    Without objection, the documents will be entered into the 
record with any redactions that staff determines are 
appropriate.
    Mr. Griffith. And with that, we will go to questions. I 
recognize myself for 5 minutes.
    And I would ask each of the witnesses how did you calculate 
your 340B savings. Is it an estimate or a precise amount? And 
if it is an estimate, what information do you need that you do 
not have in order to accurately calculate your savings?
    And as position has it, we will start of this end of the 
table with Ms. Veer.
    Ms. Veer. Thank you, Mr. Chair, for the question.
    Our savings for 2016 were $561,620 and if my CFO were here, 
he would probably give you the change. But I will say that 
there may be other ways to calculate 340B savings but for my 
health center it has been that margin remaining after the sale 
of the drug. We manage all of our programs using profit and 
loss statement specific to that program or to that site. And so 
it is an exact number based on the net margin after the sale of 
all drugs.
    Mr. Griffith. All right, thank you very much.
    Mr. Gifford.
    Mr. Gifford. Thank you, Mr. Chairman.
    We calculate our 340B savings in a very direct and simple 
way, the cost of the medication at a non-340B rate less the 
cost of the 340B medications. It is the difference between the 
two costs that we use.
    Mr. Griffith. Thank you, sir.
    Dr. Paulus.
    Dr. Paulus. Thank you.
    We calculate our savings in two ways. One, with respect to 
drugs that we get through our wholesaler, we calculate those 
based upon the difference between the discounted price and what 
our GPO price is. And for contract pharmacies, our 340B vendor 
calculates them based upon the discount.
    Mr. Griffith. All right.
    Mr. Reuland.
    Mr. Reuland. Thank you, Mr. Chairman.
    Yes, we calculate the GPO price versus the 340B price and 
use that differential as our savings.
    Mr. Griffith. All right.
    Ms. Banna.
    Ms. Banna. We also calculate the 340B price per unit of 
drug and compare that to the price in the non-340B locations.
    Mr. Griffith. Are those savings earmarked for specific 
programs or are they channeled to a general fund?
    And we will start on this end this time so that we try to 
be more fair. Ms. Banna.
    Ms. Banna. We monitor our savings first and foremost and 
then, separately, we focus on growth and expansion of charity 
and indigent care, and additionally expansion of oncology 
services, and other services that our community is looking for.
    Mr. Griffith. But I guess the question is is it earmarked 
for those programs or does it go into a general fund and then 
those are the things that, as a part of your institutional 
mission you go forward with?
    Ms. Banna. They aren't earmarked. They are tracked and 
monitored and then our growth is tracked and monitored. And we 
do ensure that our growth far exceeds the savings.
    Mr. Griffith. Thank you.
    Mr. Reuland.
    Mr. Reuland. We invest in a variety of different programs 
that are for community benefit using our savings. And they vary 
in size and range and for different kinds of patient types.
    Mr. Griffith. But are they earmarked or does it go into a 
general fund and then that is part of your general mission? 
That is what I am trying to sort out.
    Mr. Reuland. One way maybe to think about it, perhaps, is 
that there is not really a check that comes back, if you will. 
This is a lower price paid. So there isn't a check that comes 
back that then you have the opportunity to say where it goes. 
This is a reflection of paying less for a drug than you 
otherwise would pay.
    So there is not really a budgeted amount that you could say 
that is what you are going to put in each of these buckets.
    Mr. Griffith. All right.
    Dr. Paulus.
    Dr. Paulus. To directly answer the question, there is not a 
dollar-for-dollar tracking no more than there would be an 
earmark for a tax dollar that I might pay in income tax.
    But on the other hand, we track very closely our savings. 
We know those savings and when we are preparing our budget for 
each year, we include those dollars in the charity care 
allocations in all of these programs.
    So I would say that yes, they are targeted but not 
literally dollar-for-dollar.
    Mr. Griffith. OK and when you say that, so when you are 
doing your budget, you actually have a line in your budget that 
says 340B savings and then they go out in these different 
directions.
    Dr. Paulus. Yes, we do.
    Mr. Griffith. All right, thank you.
    Mr. Gifford.
    Mr. Gifford. In our budgeting process, we identify the 
savings that we anticipate in the coming year and we direct it 
to the pharmacy, health, and social services that I discussed 
in my testimony.
    Mr. Griffith. Thank you.
    And Ms. Veer.
    Ms. Veer. I would have to echo my colleagues to some 
degree. It is not an exact line item transfer dollar-for-dollar 
from one cost center to another cost center, but at the 
beginning of the year, as part of both the budgeting and the 
strategic planning process, we estimate what we anticipate 
those savings to be and then look at what programs they can 
fund, what otherwise unfunded programs they can fund.
    Then at the end of the year, we do an annual report to our 
Board of Directors linking those two together.
    Mr. Griffith. I appreciate that. I like the concepts that 
both Dr. Paulus and Ms. Veer--that doesn't mean the others are 
not doing it right--but I kind of like those because then 
somebody can actually take a look at it and see what you are 
doing with it directly.
    But I appreciate that and now I yield 5 minutes to Ms. 
DeGette for her questions.
    Ms. DeGette. Thank you very much, Mr. Chairman.
    I will just skip around. Dr. Paulus, I would like to ask 
you, yes or no, Mission Health reported to the committee that 
it saved about $37 million through 340B in 2016. Is that 
correct?
    Dr. Paulus. I believe that is correct.
    Ms. DeGette. Thank you. And Mission Health spent more than 
$183 million providing community benefits, including $105 
million in uncompensated care. Is that correct?
    Dr. Paulus. That is correct.
    Ms. DeGette. Now, Dr. Reuland, a similar question. In 2016, 
Johns Hopkins generated about $109 million in 340B savings. Is 
that correct?
    Mr. Reuland. Yes.
    Ms. DeGette. And Johns Hopkins provided nearly $220 million 
in charitable care for vulnerable populations and other vital 
community benefits. Is that correct?
    Mr. Reuland. Yes.
    Ms. DeGette. No, Ms. Banna. Your hospital, Northside, 
reported that it generated nearly $53 million in 340B savings. 
Is that correct?
    Ms. Banna. That is correct.
    Ms. DeGette. And yet Northside reported to the committee 
that it spent nearly $370 million in charity care. Is that 
right?
    Ms. Banna. That is right.
    Ms. DeGette. Now, let me just say the 340B Program doesn't 
seem to be some windfall that subsidizes bonuses for senior 
management but, as you all testified both in your written 
testimony and in your verbal testimony today, you are using 
this money to help provide essential benefits that the 
community needs.
    So I want to ask each of you if you can briefly describe 
what would happen if Congress eliminated the 340B money. I will 
start with you, Ms. Veer.
    Ms. Veer. Thank you because that is a wonderful question. 
It really gets to the heart of what we are all concerned about 
and our need for Congress to have confidence in the integrity 
and----
    Ms. DeGette. If you could just briefly----
    Ms. Veer. Sure.
    Ms. DeGette [continuing]. Describe some of those services. 
We, unfortunately, only have 5 minutes and I would like to hear 
from everybody.
    Ms. Veer. Absolutely. The delivery service that I mentioned 
that is delivering over 20,000 prescriptions to outlying rural 
areas would have to be eliminated because those costs are 
directly covered by the 340B savings, as would our in-house 
behavioral health counseling for people who don't receive care, 
or would not qualify for care, or experience delays in the 
mental health agency.
    Ms. DeGette. Thank you.
    Mr. Gifford, can you give me some examples?
    Mr. Gifford. Elimination of the 340B Program would 
substantially undermine the fight against AIDS. It would mean 
fewer resources, fewer services. Our patients would become more 
ill. They would not have an undetectable viral load. There 
would be new and more HIV infections and, sadly, far bigger 
health care costs.
    Ms. DeGette. All right, let me ask you why that is. What 
are the services that you provide that you would not be able to 
provide without this savings?
    Mr. Gifford. Certainly, we would not be able to provide as 
much medical care for uninsured patients, dental care, mental 
health therapy and drug treatment.
    Ms. DeGette. Dr. Paulus?
    Dr. Paulus. Yes, I would go back to Vice Chair Griffith's 
question, which is how we approach our budgeting. So we are 
going to expect to earn about $38 million this year. As we look 
out into next year, we would have to cut $38 million worth of 
programs. Those programs would be prioritized but might 
include, for example, 10 to 12 percent of our NICU babies are 
opioid addicted. We developed a novel detox program so that 
those babies can be detoxed at home. That costs us over $3 
million a year to detox them at home and that might be 
something but we would sure as heck be cutting some very needed 
programs.
    Ms. DeGette. Mr. Reuland?
    Mr. Reuland. Thank you. An example of a program that we 
might not be able to offer would be something our Broadway 
Center, we call it, provides. It is substance abuse recovery 
treatment. And we provide supportive housing for patients who 
are enrolled in that program because if you send patients back 
to the same environment from which they came, even really great 
daily care isn't going to help them escape----
    Ms. DeGette. What do they do in this Broadway program?
    Mr. Reuland. So there is counseling. There is medication 
treatment, typical kinds of treatment for substance abuse 
treatment and recovery. And the supporting housing is a good 
example of the wraparound project that we provide so that we 
don't send folks back to the environment from which they came 
initially while they are trying to recover. That is half a 
million dollars plus for us that we would have to take out that 
is an investment we make.
    Ms. DeGette. And Ms. Banna.
    Ms. Banna. You know immediately our organization's 
resources would be directed to offsetting the substantial drug 
price increases that we all experience annually. In doing so, 
the reduction of resources would slow our ability to provide 
additional services. So in our case, the 250 positions that we 
put in our oncology clinics that were not there before, either 
social workers, nurses, supervisors, research staff, care 
navigators, nutrition, genetic counselors, that pace would slow 
down. Those positions might not be funded, in addition to 
financial assistance directed directly to patients.
    Ms. DeGette. Thank you so much, Mr. Chairman.
    Mr. Griffith. The gentlelady yields back.
    I now recognize the chairman of the full committee, Mr. 
Walden of Oregon.
    Mr. Walden. I appreciate it.
    I served on a hospital board for 4 1A\1/2\, 5 years. 
Nobody, first of all, if talking about eliminating 340B 
Program. So, everybody breathe.
    Second, I have got to tell you I think when the average 
American hears what you would cut, not one of you said any 
overhead, capital construction, salary bonus. It was infants 
trying to recover from opioids is the first thing. Really?
    I have owned and operated a business--I will leave it.
    We have had a lot of different ways we have heard about how 
the money you get out of this program is tracked to do charity 
care. Carolina Health Centers reported spending $4.8 million in 
charity care in 2016. That represented 21 percent of the total 
patient revenue. Johns Hopkins Hospital reported $28 million in 
charity care and nearly $200 million on community benefit 
activities in 2016.
    Northside Hospital reported that from 2015 to 2016, 
September to August, it served over 32,000 distinct indigent 
and charity care patients, and reported spending $350 million 
on charity care in 2016, putting its charity care at about 
seven percent. Yet, a 2017 Atlanta Journal Constitution article 
estimated Northside's charity care at 1.7 percent of total 
expenses for 2016, based on Northside's cost reports filed with 
the Federal Government. This makes it a little hard to do 
apples to apples comparison of whether covered entities are 
truly using 340B savings to improve patient care.
    So to each of you, what do you think is the best measure to 
estimate an entity's commitment to serving low-income and 
uninsured individuals? Do community benefit programs serve only 
low-income and uninsured patients or the entire community, 
including those with commercial insurance? Would a patient 
receive one element of care for free, at a reduced cost, be 
counted as one of those patients? How do we track this? That is 
what we are trying to figure out here.
    The Government Accountability Office I think or the IG told 
us there is no clear definition what a patient is. There is no 
requirement to track. This program has expanded dramatically 
around the country.
    We are trying to figure out are the people who are supposed 
to get the help actually getting the help. So can you help us 
understand what the best measure is to estimate an entity's 
commitment to serving low-income and uninsured individuals?
    Ms. Banna, we will just start with you.
    Ms. Banna. Absolutely. I do think industry standard is not 
to reflect the provision of care to the vulnerable population 
of the percent of just operating expenses, which is what was 
done in the AJC article. I would say that is inaccurate or at 
least incomplete. When comparing to expenses, you are including 
things like overhead, and telephone, and depreciation on your 
buildings.
    So we would emphasize other more commonly quoted 
mechanisms, which would be the provision of charity and 
indigent in terms of total patient revenues or distinct patient 
served and those are the ways that we quoted in our 
submissions.
    Mr. Reuland. Mr. Walden, one of the things I might mention 
is when we set up programs, we tend to set them up from a 
clinical perspective to manage a disease state or a population 
with a disease. And so an example might be sickle cell anemia 
and sickle cell disease is a disease that you may know 
disproportionately affects African Americans. And we have set 
up a very comprehensive program, the only one in the region to 
manage those kinds of patients.
    We can't really set it up with different sort of swim lanes 
for payer capability. People move in and out of insured status 
throughout their life, as you might imagine. And so what we set 
up is a clinical program to care for them in whatever state of 
care they need and then try to support around that whatever the 
insurance needs are.
    Dr. Paulus. First, with respect to your comment, which I 
respect you have perspective on that, I did not say that we 
would not detox babies. What I said was we developed a program 
that saved the Medicaid program $3 million by detoxing them at 
home and we would probably have to revert back to inpatient 
care.
    Second, we do every single day, or we would already be 
closed, the overhead, capital projects, et cetera. So, that is 
a routine part of our business.
    I would point you, perhaps, to the idea behind Schedule H 
for the IRS filing and the community benefit. I think there 
might be opportunities there to define and identify a specific 
reporting. I would think about total unreimbursed care because 
that is really what we are talking about here.
    And those are my thoughts.
    Mr. Gifford. Ryan White grantees may have a slightly less 
complex financial world that we operate in. We welcome the 
opportunity to report the savings and how they are directed to 
specific costs for the delivery of care.
    Ms. Veer. I think the term or concept of charity care is 
one that is not terribly familiar for community health centers 
or in the community health center world, not because we don't 
understand that concept but because we operate under a set of 
statutory requirements that essentially mean we are on the hook 
for taking care of everyone, regardless of their ability to 
pay, and for providing a full range of services, regardless of 
their ability to pay, and have been for decades.
    So my health center, the $4.2 million that is listed as 
charity care really represents the cost of all care provided to 
patients for which we receive no compensation.
    And I will give you an example. If a patient qualifies for 
our nominal fee, it is $10 for a visit, which might encompass a 
99205 visit, so a complex visit, plus radiology, plus lab work. 
And for that, we are receiving $10.
    So the health centers do have a very concrete way of 
measuring that.
    Mr. Walden. I appreciate that and I thought your initial 
answer in the beginning about how much you account for was spot 
on. So, thank you.
    Mr. Griffith. Thank you very much for yielding back, Mr. 
Chairman.
    I now recognize the ranking member, Mr. Pallone of New 
Jersey.
    Mr. Pallone. Thank you, Mr. Chairman.
    I have been impressed with the responses the committee has 
received with its inquiries about how covered entities use the 
340B Program and it appears that recipients rely on program 
savings to provide important services to vulnerable patient 
populations.
    But I just want to briefly go with each of you, if I could, 
if you can just answer my question in 30 seconds.
    Mr. Gifford, your testimony states that the AIDS Resource 
Center of Wisconsin received $7.4 million in 340B discounts 
last year and that these savings played a crucial role in 
providing service to your patients. Can you explain in 30 
seconds how the 340B Program helps you provide services?
    Mr. Gifford. Certainly. They support the cost that Ms. Veer 
was discussing in terms of the professional time providing 
medical care, the laboratory costs, the medications that 
uninsured patients receive.
    And then for our physicians, they often talk about health 
care needed is overcoming the social barriers to care. So, 
making sure that mental health illnesses and drug addictions 
are addressed before they can get into the medical exam room.
    Mr. Pallone. Thank you.
    Now to Mission Health. Dr. Paulus, you reported that 
Mission Health provided $105 million in charity and 
unreimbursed care. You also reported that Mission Health's 
community benefits were worth $183 million that year.
    In 30 seconds or less, how does the 340B Program help you 
provide services?
    Dr. Paulus. Well, we are faced with a tsunami of illness 
and of need in our community. And as I described, we take our 
anticipated savings on 340B and specifically look to allocate 
those to funds to programs that we could otherwise not afford 
to provide.
    So there is a great amount of detail in our testimony in 
the written document about each of those program.
    Mr. Pallone. All right, next, Johns Hopkins. Dr. Reuland, 
you reported that Johns Hopkins provided $28 million in charity 
care and community benefits worth $191 million. Briefly, how 
does the 340B Program help Johns Hopkins provide services to 
the community?
    Mr. Reuland. So I will give you just two very quick 
examples, one that is in our community benefit report and one 
that isn't.
    In the community benefit report, the Health Leads Program 
is an opportunity for us to prescribe basic things like food, 
shelter, clothing, utility support for patients who need it. 
And that can be for any disease state. That is a general 
concept that we use in a lot of our outpatient areas.
    More broadly, we have done a development exercise in the 
region right north of our campus that is a partnership with the 
city and some developers to basically take an old burned out 
part of the city and redevelop it in a way that we would be 
happy to tell you more about. But it is those kinds of city 
building and infrastructure-building activity that are on the 
broader scale.
    Mr. Pallone. Well, thank you.
    And then moving on to Carolina Health Centers, Ms. Veer, 
you state in your testimony the 340B savings enable Carolina 
Health to provide services that would otherwise go unfunded.
    In a minute or less, how does that work?
    Ms. Veer. Well first and foremost, I will read a quote out 
of my written statement that was from one of my most senior 
medical providers. To diagnose when the patient has not access 
to affordable medication is always an exercise in futility and, 
in some cases, it is an announcement of a death sentence.
    So first and foremost, it allows us to make essential 
prescription medications available to low-income patients who 
otherwise would not have any access to their medication.
    Mr. Pallone. All right, thank you.
    And then last, Ms. Banna, Northside Hospital reported that 
it provided nearly $370 million in charity care, as well as 
community benefits such as oncology, patient assistance, 
maternity education, surgical services for the uninsured. Do 
you want to explain to us how 340B helps you provide those 
services?
    Ms. Banna. Absolutely. I think in its simplest form, 340B 
reduces our costs. And as a nonprofit hospital, that is what we 
strive for each and every day. Reducing our costs fuels our 
ability to expand our mission into our communities. And you are 
hearing from each of us that our missions are different but we 
use that savings to empower growth out into the communities 
that we serve.
    Mr. Pallone. All right, thanks.
    I wanted to ask anyone how you make sure the savings 
actually go to help patients. I know 30 seconds, maybe I will 
go back to Mr. Reuland.
    Mr. Reuland. Well, there are plenty of very direct 
assistance programs, including a Pharmacy Assistance Program, 
for example. Patients who show up and if you walk to one of our 
clinics and they say I cannot pay for my medications or a 
copayment for them, we have the discretion through a Pharmacy 
Assistance Program on the spot to make sure that the patient 
can leave with the medications that they needed. And then we 
can help them after that to perhaps connect them to some other 
form of payment going on over time or, sometimes, we continue 
supporting that right through these dollars.
    Mr. Pallone. That is a good example.
    Thank you, Mr. Chairman. Thank you all.
    Mr. Griffith. The gentleman yields back.
    I now recognize Mr. Walberg of Michigan.
    Mr. Walberg. Thank you, Mr. Chairman and thanks to the 
witnesses for taking the time to be here with us today.
    I want to get to the concerns about the savings that you 
have had that you have talked about today. I also want to ask 
some questions relative to how you train and evaluate the 
success of the program, the costs, et cetera, how you 
administer it. But I think our chairman brought up some points 
I would like to go into first and meddle a little bit, I guess, 
at this point, kind of get personal.
    I pulled the 990s of each of your organizations for the 
most recent years that we are able to get to, 2015. So let me 
ask you just to respond yes or no, correct or false to these 
questions.
    Ms. Veer, Carolina Health Centers indicated that the salary 
for the CEO was $198,000. Is that correct?
    Ms. Veer. That is correct.
    Mr. Walberg. Mr. Gifford, for the AIDS Resource Center, it 
was indicated that the salary for the CEO was $350,000. Is that 
correct?
    Mr. Gifford. That is cash compensation, yes.
    Mr. Walberg. OK, cash compensation. OK.
    Let me ask Mr. Paulus, Mission listed at $1.6 million, 
approximately.
    Dr. Paulus. I assume that is correct.
    Mr. Walberg. OK. Mr. Reuland, Johns Hopkins lists for that 
year $2.6 million.
    Mr. Reuland. I also have to assume that is correct.
    Mr. Walberg. OK and then Ms. Banna, it is listed for 
Northside at $2.8 million that year.
    Ms. Banna. That is correct.
    Mr. Walberg. OK. Let me plumb a little bit more here. Going 
back to the net assets for each of your organizations at the 
end of 2015.
    Northside, Ms. Banna, $1 billion net asset; net income $157 
million.
    Ms. Banna. That is correct.
    Mr. Walberg. Is that correct?
    Mr. Reuland, Johns Hopkins listed at $1.3 billion; net 
income $80 million, almost $81 million.
    Mr. Reuland. That is correct, about a 3.6 percent operating 
margin.
    Mr. Walberg. OK. Mr. Paulus, Mission is listed at $1.4 
billion; net income $101-102 million.
    Dr. Paulus. Sounds right.
    Mr. Walberg. OK. Mr. Gifford, your AIDS Resource Center 
$12.7 million.
    Mr. Gifford. That sounds correct and it is just a fraction 
of what our financial advisors are suggesting necessary to 
assure longevity.
    Mr. Walberg. The net assets of $12.7 million.
    Mr. Gifford. Correct.
    Mr. Walberg. Ms. Veer, Carolina Health Centers, $7.7 
million net assets?
    Ms. Veer. That sounds correct, yes.
    Mr. Walberg. OK. I just wanted that for the record. Again, 
there are certainly explanations, and extenuating 
circumstances, and other things that I am sure you can share 
with us on those issues but it is good to have those factors 
in, especially when we are talking about entities listing 
saving over $100 million annually through the program.
    The program has grown rapidly in the last decade and it 
seems it will continue to grow. So, those figures are 
important.
    In the area of education, let me ask you each to respond. 
First of all for the sake of context, how many full-time 
employees do you have total? And secondly, how many employees 
of those full-time employees do you have devoted fully to 340B 
administration and compliance?
    Ms. Veer?
    Ms. Veer. In our most recent Universal Data System report 
to HRSA, we reported 231.20 full-time employee equivalent. Of 
that, 45.40 are pharmacy employees. And since approximately 50 
percent of our business in the pharmacy is 340B, I would 
estimate that our pharmacy staff devoted to 340B is 
approximately 25.
    Mr. Walberg. Twenty-five, OK.
    Mr. Gifford?
    Mr. Gifford. ARCW has 240 employees, about 25 of them who 
work in our pharmacy. 340B is the largest part of our pharmacy 
operations so, they are all devoted to it. Additionally, we 
have a compliance department that includes two full-time 
employees and parts of six other employees.
    Mr. Walberg. Mr. Paulus?
    Dr. Paulus. We have two dedicated full-time people who do 
nothing but 340B and 76 others that have 340B as part of their 
job description, including five people who have gone through a 
complete 340B university training.
    Mr. Walberg. Total employees how many?
    Dr. Paulus. Twelve thousand.
    Mr. Walberg. Twelve thousand total employees.
    Mr. Reuland?
    Mr. Reuland. Johns Hopkins Hospital employs about 10,000 
FTEs directly, not counting our physicians. And we have about 
nine to ten whose effort is primarily dedicated toward the 
program, significantly toward the compliance of the program.
    Mr. Walberg. OK and Ms. Banna?
    Ms. Banna. We have over 14,000 employees. We have an 
integrated approach. There are people in multiple departments 
across our hospital that have been educated and we consider 
content experts. Fifty to seventy-five people are educated in 
content experts. I would say the pharmacists are most directly 
full-time 340B-responsible. So that is probably 25 to 25.
    Mr. Walberg. Thank you. I yield back.
    Mr. Griffith. The gentleman yields back. I now recognize 
Ms. Castro of Florida for 5 minutes for questions.
    Ms. Castor. Thank you, Mr. Chairman. Based upon what I have 
seen from my hospitals, and providers back home, and the 
testimony today, I think it is clear that the 340B Program is 
critical to America's healthcare safety net. And according to 
HRSA, 340B savings represent less than 2 percent of total drug 
spending in this country but the benefits here under 340B are 
so broad where you are able to expand health services, you are 
able to see more patients, offset losses from uncompensated 
care.
    And at a time when drug prices are skyrocketing across the 
board for consumers, here is one bright light for our neighbors 
back home. And I have seen it at Saint Joseph's Hospital. It is 
part of the BayCare Health System. They provide over $100 
million in charity care per year, about, and 340B has helped 
them save about $17 million.
    They run the Children's Hospital there, a complex clinic 
for the medically fragile. And what they are able to do with 
wraparound services, as has been mentioned, is remarkable. They 
have had to expand substantially behavioral health and 
substance abuse services and that is where part of the savings 
go. And we are all grappling with that.
    And they have a care clinic that stretches the federal Ryan 
White funding to support a continuum of care to maintain a 
higher retention rate for HIV patients achieving viral 
suppression, which is vital for the future.
    And Tampa General Hospital is our teaching hospital for the 
University of South Florida. It is our Level I trauma center. 
They provide about $78 million in uncompensated care. 340B has 
helped them save about $35 million. And I have seen what they 
have been able to do as the Congress has said we are going 
penalize the hospital if patients are readmitted after 
discharge. I have seen what they have been able to do on an 
innovative basis to really make sure patients at discharge have 
the prescriptions they need and it has largely been through the 
340B savings that they have been able to achieve that.
    So, Dr. Reuland, Johns Hopkins recently expanded to the All 
Children's Hospital in the Tampa Bay area. We are grateful for 
that, as you raise the standard of care there.
    In your written response to the committee's letter, you 
suggest that the total amount of free and discounted care 
provided you can't just look at pure charity care but also at 
the services provided to the community to help vulnerable 
populations. I have seen this working. I have seen providers 
become more innovative. Is that a fair understanding of how 
Johns Hopkins measures its commitment to the community?
    Mr. Reuland. Yes, I appreciate you pointing that out. And I 
also appreciate you pointing out that the growth in savings is 
really a reflection of the growth in our spend of drugs.
    And so to give you our experience, our drug spend grows 
between 8 to 10 percent a year over the past 5 years, 
oncologics, new therapies, immunotherapies, and in some cases 
just explained drug inflation that we can't explain. We had 
seven very common drugs, the price of which went up 312 percent 
with volume going up 12 percent. And one of those drugs is 
commonly found on a crash cart, a cart that we use to 
resuscitate patients. So the drug spend growth is what leads 
the savings growth for us and that is a big part of it.
    Ms. Castor. And there is an important qualifier. If someone 
just tuned into this hearing, they would say wow, what is 
happening here but HRSA and the parameters that the Congress 
has put into law over time says these covered entities are a 
real subset of providers across the country. Can you explain 
that a little further? What is the covered entity gateway to 
qualify for 340B?
    Mr. Reuland. If I understand the question, we qualify by 
virtue of being a DSH hospital. Our percentage DSH is about 19 
percent.
    Ms. Castor. DSH hospital for someone that is tuning in----
    Mr. Reuland. Disproportionate share of our patients come 
from an underserved and have a social security disability 
eligibility.
    Ms. Castor. You are saying a disproportionate share of our 
neighbors back home who don't have health insurance coverage or 
they are underinsured.
    Mr. Reuland. Yes.
    Ms. Castor. And Ms. Banna, in Georgia, you are kind of in 
the same boat as the State of Florida. Georgia did not expand 
Medicaid coverage, like Florida. Our uninsured rate is about 13 
percent. I think it is about that in Georgia. Is that right?
    Ms. Banna. I believe it was 9 percent most recently.
    Ms. Castor. Most recently 9 percent. So you know these 
disproportionate share providers and our community health 
centers are seeing so many folks who just do not have the 
ability to pay. And what you are able to do with these savings 
is pretty remarkable.
    But let me ask you this, Ms. Banna. This goes back to what 
Dr. Paulus said, the tsunami of need. Should we be looking at 
purely charity care provided to uninsured individuals or the 
total uncompensated care borne by hospitals, including bad debt 
and losses on Medicaid? In Florida we are looking at a governor 
that wants to slash the reimbursement rate yet again. That is 
going to make it even more difficult to provide the care that 
our neighbors need.
    Ms. Banna. I agree. Dr. Paulus brought this up earlier. 
Uncompensated care is measured on the IRS 990, which is the 
Schedule H is used as a reliable method for quoting the 
complete view of the uncompensated care that a healthcare 
entity is providing to its community.
    In responding today, Northside chose conservatively to 
respond to only the indigent and charity care that we provide, 
simply because----
    Ms. Castor. You didn't include bad debt?
    Ms. Banna. We didn't include bad debt and we didn't include 
other elements of uncompensated care, which includes the care 
that is not covered that is provided to Medicare and Medicaid 
beneficiaries. There are entire other populations of care that 
is provided effectively free to the community.
    Ms. Castor. Thank you very much.
    Mr. Griffith. The gentlelady yields back.
    I now recognize Mr. Costello of Pennsylvania for 5 minutes 
for questions.
    Mr. Costello. Thank you, Mr. Chairman.
    To each witness, the 340B Program provides covered entities 
with discounts on prescription drugs. Does your entity provide 
all 340B patients with discounted prices on prescription drugs?
    Ms. Veer. Starting on this end, I am assuming. Yes, we do, 
according to the rules, HRSA rules, around our sliding fee 
scale. Sliding fee is required. A sliding fee program is 
required for all services that we provide.
    So in my organization, the price to a patient under 200 
percent of poverty is based on the 340B discount price plus a 
deeply discounted dispensing fee.
    Mr. Costello. Does your entity provide uninsured or self-
pay 340B patients with discounted prices on prescription drugs?
    Ms. Veer. Yes.
    Mr. Costello. Mr. Gifford.
    Mr. Gifford. Yes, we do. We operate under a comparable 
sliding fee scale that FQHCs----
    Mr. Costello. Yes to both those questions?
    Mr. Gifford. Yes.
    Mr. Costello. Dr. Paulus?
    Dr. Paulus. Yes, we don't always know who is 340B-eligible 
at the time of service but we provide, as I said, free care up 
to 200 percent of the federal poverty guidelines. And we have 
the Medication Assistance Program that provides free or 
discounted drugs to all of those patients.
    Mr. Costello. OK, Mr. Reuland.
    Mr. Reuland. Yes, our Pharmacy Assistance Program applies 
to any patient, whether uninsured, underinsured. If they can't 
afford their coinsurance and their copayments, we use our 
Pharmacy Assistance and Charity Care policies to help cover 
them.
    Mr. Costello. Yes to both questions?
    Mr. Gifford. Yes.
    Mr. Costello. Ms. Banna?
    Ms. Banna. Yes to both questions. If you qualify for 
indigent or charity care, then we are looking for opportunities 
to provide that.
    Mr. Costello. OK, back to Ms. Veer. Does your organization 
use patient assistance programs offered by biopharmaceutical 
companies or other entities to help lower the cost of 
prescription medicines for patients?
    Ms. Veer. Yes, we do.
    Mr. Costello. What percentage of your patients receive free 
medicine from a patient assistance program that is offered by a 
biopharmaceutical company or other entity? What percentage?
    Ms. Veer. I don't have that exact percentage at my 
fingertips.
    Mr. Costello. Do you have that, though, the answer to that, 
in terms of the percentage?
    Ms. Veer. I could obtain that but I don't have it in my 
documents.
    Mr. Costello. Mr. Gifford?
    Mr. Gifford. Yes, we use financial pharmacy assistance 
programs and I could obtain the percentage of patients that 
utilize them for you also.
    Mr. Costello. Dr. Paulus?
    Dr. Paulus. We do, from time to time, use that. I do not 
know what the percentage is. I could try to find out.
    Mr. Costello. Mr. Reuland?
    Mr. Reuland. Yes, we do use those programs. I don't have 
that percentage here. And we also use foundations and other 
not-for-profits.
    Mr. Costello. Ms. Banna?
    Ms. Banna. We do have an Oncology Patient Assistance 
Program. Forty-nine million dollars of care was identified 
specifically to oncology patients that is completely separate 
from charity and indigent care. So needs beyond say means 
tested, $31 million of that represented free drugs that were 
supplied by vendors. So some of the full-time equivalent of 
people that I mentioned that we have hired work to contact 
vendors directly and identify programs to supply drugs free to 
these patients.
    Mr. Costello. OK. So another line of inquiry here.
    I served on the hospital board for a little while. I also 
served as a county commissioner. The best thing was flexible 
funding. When you had a funding stream that you were able to 
sort of figure out where to fill in the gaps that didn't have a 
lot of reporting requirements, that wasn't subject to an audit 
that froze where or when you could use the money, that was 
always preferable to a funding stream that had attachments to 
it that required an audit.
    And I think the concern here, everybody supports 340B. OK? 
I look at all of you. You are in it for the right reasons. You 
want to do good. You are helping people. Totally onboard.
    I think the concern, as I read through the materials is 
that with the 340B funding does not necessarily come the type 
of accounting accountability that enables us to audit, to 
ensure that the money is being spent in those programs and in 
the ways with which it was intended. And so when we read that 
while we weren't able to unearth through an audit whether 
compliance was in fact successful or not as a consequence of us 
not being able to audit, it causes a great deal of frustration 
and we want to fix that.
    Mr. Gifford, as I understand it, let me make sure I have 
this right, have you developed software to monitor compliance?
    Mr. Gifford. Yes, we have.
    Mr. Costello. OK. Are all of you familiar with the software 
that he has developed to monitor compliance?
    Do any of you object to creating an accounting mechanism so 
that as you get this funding, it is able to be audited in a way 
which comports with us being able to ensure that you have 340B 
compliance? I think that that is the gist of it, as I----
    Do you have concerns? Ms. Veer.
    Ms. Veer. Yes, I was just going to say I do think, I can 
only speak from the perspective of a HRSA grantee but from that 
perspective, one of our grant conditions is that we are 
required to use all program income, including what is generated 
outside of the grant, for the purposes of advancing our HRSA 
scope of projects. So we do have a reporting mechanism for 
accountability.
    And in terms of our pharmacy, from the compliance 
standpoint, we audit daily to ensure that the program is being 
used specifically for 340B patients.
    Mr. Reuland. Yes, I would add it sounds like there may be 
two issues: the compliance with meeting the requirements and I 
think the software program. I am not sure which one you are 
referring to there but we use one as well to assure that we 
only avail ourselves of a discount for the appropriate 
patients. And that is an important part of the program.
    Anything that would curtail the flexibility, as you said, 
of our ability to invest in that entire patient would be a 
challenge I think. So we would look at a policy proposal but 
the flexibility remains the most important thing, as you 
pointed out.
    Mr. Costello. I yield back. Thank you, Mr. Chairman.
    Mr. Griffith. I thank the gentleman. The gentleman yields 
back.
    I now recognize Ms. Schakowsky--Ms. Clarke has just walked 
in. Are you ready to go, Ms. Clarke?
    Ms. Clarke. Yes, I am.
    Mr. Griffith. All right, then Ms. Clarke of New York.
    Ms. Clarke. Thank you very much, Mr. Chairman and I thank 
our Ranking Member DeGette. I thank our expert panelists for 
their testimony here today.
    I understand that a lot of the questions my colleagues 
about this program relate to whether providers are using their 
340B benefit to stretch scarce federal resources as far as 
possible to help low-income patients.
    As I understand the purpose of the 340B Program, Congress 
intended to provide a financial benefit to qualifying providers 
who treat high volume of low-income, Medicaid, uninsured, and 
underinsured patients so they are able to provide services to 
these populations.
    I hear frequently from hospitals in my district about how 
they are able to provide services to low-income patients in my 
district because of the 340B Program. For example, NYU Langone 
Health has invested 340B funds in several areas in my district, 
in particular, at the Family Health Center and four school-
based health centers. 340B funds were used to implement at the 
Family Health Center and the school-based health centers the 
same electronic health system that is used at NYU Langone 
Health for all its hospitals' and physicians' offices so that 
when one of their patients goes to the NYU Langone Hospital-
Brooklyn, after being seen at the Family Health Center, there 
is a full record of the treatment that patient received at the 
Family Health Center or school-based health center, avoiding 
duplication of tests and giving the treating physician a full 
view of the patient's history prior to care.
    I also hear frequently from hospitals that there would be 
an impact on their ability to treat low-income and rural 
patients if access to 340B savings was limited.
    So my question to you is can you tell me about that? 
Without 340B, what would be the impact on patient care? And 
feel free, whoever.
    Ms. Veer. I think the most immediate impact on patient care 
is without the 340B Drug Pricing Program, the prescriptions 
themselves would be unaffordable for many of our patients.
    On the medical side of our health center, we serve 
approximately 22 percent of uninsured patients of our 26,000. 
So for that 22 percent of our patients, I am not sure that they 
would have access to affordable medication. Affordable 
medication is the greatest driver of improved clinical 
outcomes. So it would have a dramatic impact on our clinical 
outcomes.
    Dr. Paulus. I would just add to that. For us, if you look 
back to 2016, we had about $37 million in 340B savings and we 
had a $53 million operating margin. So 70 percent of our entire 
operating margin, which is not for largess but for maintaining 
programs, and replacing buildings that are deteriorated, and so 
forth, and so on, that would be gone.
    In addition to that, as Ms. Veer just noted, when you look 
at the long-term impact of appropriate pharmaceuticals, it is 
one of the few places where we can make secondary prevention. 
By that, I mean we can treat a disease like 
hypercholesterolemia or other kinds of things and avoid much 
more expensive, much more debilitating programs downstream.
    So unless people perceive that there is free money laying 
around or we are just grossly inefficient and incompetent, you 
can't remove that kind of benefit. And again, in our case, the 
entire benefit for 340B is less than just our charity care.
    Lastly, you can't look at this without also looking at bad 
debt. As high deductible plans have gotten ever higher, the 
patients have no ability to pay those amounts. They then become 
part of the charity care, which is one of the reasons why our 
charity care is up 20 percent in 2017 over 2016 because those 
people have no capacity to pay those deductibles.
    Mr. Reuland. Thank you for the question. And I think an 
example, I will build on that sickle cell disease program I 
mentioned earlier.
    One of the things that Dr. Lanzkron and her team do is 
actually reach out to patients to make sure--because high and 
low temperature exposure can actually bring on a sickle cell 
crisis, they work hard to make sure that they in fact have 
appropriate air conditioning option or heating option so that 
they can avoid having a crisis in the first place. Those are 
the kind of things that you could imagine would suffer.
    On a larger scale, we have invested in a program, a bundle 
of case management services that has been shown to reduce 
readmissions and inappropriate use of our hospitals and EDs on 
a broad scale. If we can't fund those kind of interventions, we 
could drive utilization back up in an unintended way.
    Ms. Clarke. I thank all of you for your responses and I 
yield back, Mr. Chairman. Thank you.
    Mr. Griffith. Thank you for yielding back.
    I now recognize the gentleman, Mr. Carter of Georgia.
    Mr. Carter. Thank you, Mr. Chairman and thank all of you 
for being here today.
    As the only pharmacist currently serving in Congress, I am 
very familiar with the 340B Program. I have seen the benefits. 
I have also seen where it can be abused.
    As the chairman said earlier, the chairman of the full 
committee, the reason we are here is because one of the 
initiatives of this committee, hence, Oversight and 
Investigations, is to look into programs and see how we can 
improve those programs.
    I will remind you that we had a hearing in July. And for my 
colleagues, I want to remind them, if you can play the clip 
now, of what we heard in that hearing.
    Well, it looks like we are not going to get it. But what we 
heard over and over was the statute is silent. The statute is 
silent. It was irresponsible, as Members of Congress, that we 
did not specify exactly what we heard.
    Have you got it now?
    [Video shown.]
    Mr. Carter. That is what we heard. That is why we are here 
today. That is why we need your help because it is 
irresponsible of us. That is our responsibility in Congress.
    You know I take offense and I am resentful of my colleagues 
on the other side of the dais to insinuate that we have somehow 
said we wanted to cut out this program. I have never heard 
anyone say we wanted to cut out this program but we have a 
responsibility, as Members of Congress, to make sure this 
program is running correctly and it is not being abused.
    I want to ask some very quick questions here. Ms. Vanna, I 
am very familiar with Northside Hospital and I have worked with 
you in the State Legislature. You enjoy a great reputation in 
the State of Georgia. I am sure it is hard-earned. I am sure it 
is well-deserved.
    However, I need to ask you some questions, particularly as 
it relates to consolidation. One of the things that I have 
discovered as a Member of Congress is just what an impact our 
actions here in Congress can have on the private sector and 
have on the free market. Have you, in recent years since you 
have started this program, has there been an increase in the 
number of clinics that Northside Hospital has acquired, 
specifically oncology clinics?
    Ms. Banna. I think that we are, as a hospital system, being 
encouraged to expand our clinically-integrated outpatient care 
model, yes.
    Mr. Carter. That is not what I asked and you are under 
oath. OK, Ms. Banna? Have you increased the number of oncology 
clinics that you have bought since the 340B Program has come 
into effect?
    Ms. Banna. Well, in our case, we did acquire oncology 
clinics in 2011 and 2012, yes.
    Mr. Carter. Does the 340B Program have anything to do with 
that or are you acquiring the oncology clinics because you have 
a chance to make more money through the 340B Program, hence, 
what we have done in Congress is leading to a consolidation in 
health care inadvertently on our part?
    Ms. Banna. No, and forgive me, that goes back to my prior 
answer. We are being encouraged to expand our clinically-
integrated model past the hospital----
    Mr. Carter. Ms. Banna, can you get me in writing how many 
oncology clinics Northside Hospital has acquired since 1992? 
Will you do that for me? I would appreciate that very much.
    I want to go now to Mr. Reuland and Johns Hopkins and I 
want to ask you how many 340B drugs were distributed to Part B 
beneficiaries last year. Do you know that?
    Mr. Reuland. I don't know that.
    Mr. Carter. Can you get me that in writing?
    Mr. Reuland. I think so. So what is the question?
    Mr. Carter. The question is how many 340B drugs were 
distributed to Part B recipients last year through Johns 
Hopkins?
    Mr. Reuland. It might be good to work offline to make sure 
we know what you mean by how many drugs.
    Mr. Carter. How many drugs, obviously 340B drugs that you 
got through that.
    Mr. Reuland. But we would be happy to work with you.
    Mr. Carter. OK, you all are familiar with CMS and their 
recent proposal to cut the reimbursement for Part B 
reimbursement on these drugs from APS plus six to APS minus 22 
and a half. Are all of you familiar with that proposal?
     Mr. Gifford, you said earlier in your opening testimony 
that it doesn't cost the government any money whatsoever. And I 
would refute that point. In fact, I would tell you that the CMS 
has said that by changing this formula that it could save over 
$900 million. So it does cost taxpayers money and it costs 
taxpayers money not only in the Part B program but also in the 
programs with Part D, when it pushes people out of the donut 
hole into the catastrophic. Then, the Federal Government has to 
pay more and that is something that costs us as well.
    One question for you, Mr. Gifford, and that is as I 
understand it the requirements for the Ryan White patients for 
the AIDS patients are actually more stringent than they are for 
anywhere else. You seem to be a strong advocate of the program 
and very supportive of the program.
    If we were to tighten it up for the other areas, do you 
think that it would impact them that much?
    Mr. Gifford. I would hope that the community would look at 
expanding the use of the dollars that we save through 340B and 
I included that in the written testimony. The current 
constriction on Ryan White programs are actually inhibiting our 
ability to----
    Mr. Carter. So your answer to me is that this is actually 
restricting you. You could actually, if we were to loosen it up 
instead of tightening it up, you could actually do more as 
these other hospitals have done.
    Mr. Gifford. If we could loosen this up for Ryan White----
    Mr. Carter. But my question to you was since you have got 
more stringent requirements, you still benefited from the 
program. You spoke very highly of the program.
    Mr. Gifford. The program does support the fight against 
AIDS in many ways and we would hope that the committee would 
expand our ability to offer life savings----
    Mr. Carter. Again, let me explain to all of you that no one 
has said they want to do away with this program. All we have 
said is that we understand we have a responsibility to tighten 
this up, to make sure it is being used like it was.
    And Ms. Veer, you have made some very good points and I 
want to thank you for what you are doing over there.
    Thank you very much, Mr. Chairman.
    Mr. Griffith. The gentleman yields back.
    I now recognize Mr. Tonko of New York for 5 minutes for 
questioning.
    Mr. Tonko. Thank you, Mr. Chair.
    Before I begin my questioning, I will echo my colleagues' 
expressions of strong support for the 340B Program. While it is 
always appropriate to conduct oversight and review that the 
implementation of a 25-year-old law, the testimony we have 
heard from our witnesses today about the ways in which they are 
using 340B savings to reinvest in their communities and serve 
needy populations shows us that the program is working well 
across our country.
    In my district, the 340B program is also paying dividends, 
benefiting community health centers, Ryan White clinics, and 
safety net hospitals.
    Ellis Hospital in Schenectady used 340B savings to treat a 
patient suffering from an acute porphyria attack. As you know, 
porphyria is a very rare disease that causes cycles of extreme 
abdominal pain, vomiting, high blood pressure, increased heart 
rate and anxiety. The patient had previously been unable to 
obtain treatment, which costs upwards of $50,000, due to the 
cost. As a direct result of the 340B Program, Ellis was able to 
provide the initial treatment and also to develop a procurement 
and administration plan for future attacks.
    These types of human success stories help to illuminate the 
value that the 340B Program provides and should also serve as a 
note of caution to policy makers as we evaluate the program.
    As with other efforts to address health care in this body, 
our goal when considering changes to 340B must always be first 
do no harm.
    I want to go back to the questioning of our witness from 
Northside Hospital. To you, Ms. Banna, I am understanding that 
Northside reported to the committee that most of its 340B child 
sites were sites already associated with Northside prior to 
2012 but were registered between 2012 and 2017 because of 
changes to the HRSA guidance.
    Northside did, however, acquire two oncology practices in 
2013, did it not?
    Ms. Banna. Those discussions began in 2011 and completed in 
2012.
    Mr. Tonko. OK. So Ms. Banna, can you explain why Northside 
acquired these sites?
    Ms. Banna. Absolutely. We were approached by a large 
oncology practice that was seeking integration with the 
hospital system, as were several other hospital systems in the 
Atlanta area. We worked with them throughout 2011 and 2012 to 
determine the model that would provide the right kind of 
clinically-integrated care that both parties were looking for 
and completed that transaction in 2012.
    Mr. Tonko. And Ms. Banna, to your knowledge, has any 
patient been denied service at these oncology sites due to 
inability to pay since you acquired them?
    Ms. Banna. Since we acquired them, no. As a nonprofit 
hospital, that is a service that we extend to meet the need no 
matter the ability to pay.
    And typically, that is a service that is not in place prior 
to a nonprofit hospital's entrance.
    Mr. Tonko. Thank you, Ms. Banna. And would it be accurate 
then to say that since Northside does not deny services to 
Medicare-eligible, Medicaid-eligible, or uninsured patients, it 
is likely that these oncology sites now provide services to 
more patients than when the sites were privately owned?
    Ms. Banna. Absolutely.
    Mr. Tonko. And one last question, Ms. Banna. Does Northside 
place oncology patients into any type of queue through which 
commercially-insured patients are treated before Medicaid and 
Medicare patients?
    Ms. Banna. No.
    Mr. Tonko. Thank you.
    I would like to also go over to address the Mission Health 
program. So, Dr. Paulus, I understand that the 340B savings 
cannot be directly attributed to individual services. However, 
generally speaking, if Mission Health could not rely on savings 
from the 340B program, how would that affect your ability to 
provide these community benefits?
    Dr. Paulus. Well, as I mentioned, it would have a major 
impact. We had about $37.4 million worth of 340B savings last 
year and our entire operating margin was $53 million. So, that 
is 70 percent of the total. We need that operating margin to be 
able to maintain services, replace outdated buildings and 
equipment and so forth. And so we would have to go through and 
figure out how to cut our budget. And by definition, some of 
the outreach and charity that we do today would have to be 
curtailed.
    Mr. Tonko. Thank you. And Dr. Reuland, Johns Hopkins 
reported $109 million, I believe, in 340B savings in 2016. If 
you could not rely on those savings, what impact would that 
have on your ability to provide services in your given 
community?
    Mr. Reuland. Well thank you for the question. And 
certainly, as I think we have been elaborating on, the 
wraparound services and the preventive services that we try to 
put in place in addition to the standard services is really 
what it is to serve an underserved community. And our 
inability, if we had to increase our drug prices by $109 
million, that would cause a significant amount of cost pressure 
and cause us to have to cut back on some other programs, just 
like the ones we have mentioned.
    So, I think I will give you an example that there is a 
program called the CAPABLE Program, where we send a nurse, an 
occupational therapist, and a handyman or handywoman to a 
person's house. And they will typically install a second 
bannister for somebody who can get up and down the stairs now 
and get to a doctor's appointment more easily. It is that kind 
of hands-on community work that we would simply not be able to 
support.
    Mr. Tonko. Thank you. And Ms. Veer, how would losing 340B 
savings impact Carolina Health's ability to provide services in 
your given community?
    Ms. Veer. Well, I have spoken to two or three specific 
programs that are funded by the 340B savings. Our delivery of 
prescriptions into very rural outlying areas that would be very 
difficult to sustain. We also provide behavioral health 
counseling in our sites for people who would experience long 
delays in accessing the local mental health agency. Both of 
those areas would be significantly impacted.
    Beyond that, we have medical sites in rural areas that, 
because of the nature of the population there and how rural the 
area is, they operate at a loss. And so total out of our 13 
sites, those operating losses are around $1.8 million. We would 
definitely need to look at how we redistributed care to those 
areas, possibly combining some of those sites or reducing hours 
at those sites.
    Mr. Tonko. Thank you. I appreciate the quality services you 
all provide with these savings.
    And with that, Mr. Chair, I yield back.
    Mr. Griffith. The gentleman yields back.
    I now recognize the gentleman from New York, Mr. Collins.
    Mr. Collins. Thank you. And I want to thank the panelists 
for being here and maybe reset the stage just a bit.
    All of us stipulate the great benefits the 340B--the 
pharmaceutical companies stipulate that. It has been around a 
long time. I think what we are starting to look into, though, 
and I won't use the word abuse because if something is legal, 
it is not an abuse, but I will use the word loophole. We have 
seen a huge increase in the number of oncology practices which 
deliver the most expensive drugs to America being bought up by 
hospitals, whether it is Johns Hopkins or others. Right in my 
area, the largest oncology practice was recently purchased by a 
DSH hospital and, I would say, for only one reason and that is 
the 340B profit.
    You know they are buying up oncology practices where 
basically, when you are out in the suburbs, the vast majority 
of those patients are fully insured. Those practices have never 
gotten 340B discounts on the $100,000 kind of drugs. The minute 
a DSH hospital acquires that practice, all of a sudden these 25 
to 50 percent discounts flow to the bottom line of the 
hospital, plain and simple. A business decision. I can't blame 
you for it. It is legal.
    But I call that a loophole and here is why. If I look at 
the requirements to be a DSH hospital, you have to have a 
certain percent of Medicare and Medicaid patients--inpatients 
not outpatients. It is defined and calculated by inpatient 
stays in the hospital. But yet when you get to a clinic in the 
suburbs, those are outpatient.
    So these DSH hospitals which qualify based on inpatient 
hospital stays are able to acquire outpatient oncology 
practices, without that impacting that calculation. That is a 
loophole.
    Number two, the whole idea that what you call a child site 
is one of these oncology practices, nothing changes. The 
patients go to, in many cases, like a shopping center. They 
park there. They see their same doctors except the doctors now 
work for the hospital. And the monies, the discount paid by the 
pharmaceutical company now goes to the bottom line of the 
hospital and we have no idea what it is going for. You tell us 
you are using it for outpatient work.
    The Ryan White clinics, they tell us exactly where they go. 
The hospitals tell us that is too much administrative overhead 
to tell us but, trust us, we are providing more services. Maybe 
you are. And if you are, you should be held accountable for it.
    Because here is the bottom line. I know this isn't 
government money and this is the problem. The discount the 
pharmaceutical companies are giving and people go whoa, the big 
pharmaceutical companies, they make too much money, yadda, 
yadda, yadda but let us face it, that is where the new 
discoveries are coming from that is improving health care in 
the United States.
    And here is my worry. The business model used to be let's 
call it a 25-30 percent discount over a certain number of 
groups, including your hospitals but you didn't own these 
oncology practices. And I would put forth you are buying them 
for only one reason and that is the bottom line of the 
discount.
    At some point, the prices for these pharmaceuticals are 
going to go up for everyone. Pharmaceutical companies that used 
to have to discount, I don't know, half my drugs, now I am 
discounting 90 percent of my drugs. Guess what? The list price 
goes up. There is no free lunch. And that is my problem.
    It is not that we don't understand the importance of 340B. 
It is that the definition of the DSH hospital doesn't even take 
into account the outpatient work in these clinics. These are 
people that were fully reimbursed.
    The other thing I am a little troubled by and you can tell 
me if I am right or wrong but many cases, $100,000 procedure 
might be discounted to $40,000. Is that reasonable? For a fully 
insured patient you see it. $100,000, oops, discount down to 
$40,000. But when you write it off as charity care or bad debt, 
don't you put it in as $100,000 and not $40,000?
    Mr. Reuland?
    Mr. Reuland. Well, what I was going to say is a couple of 
comments. The State of Maryland is a little bit different in 
that regard. And the State of Maryland's hospital rates are 
regulated by the entity called the Health Services Cost Review 
Commission. And the charges are actually governed to a level 
that is very close to the cost and so there is no opportunity 
that you are describing there.
    I would also point out that as a comprehensive cancer 
center, our growth has not been because of the purchase of any 
practices. Johns Hopkins Hospital has purchased no oncology 
practices. We grow because there is sort of a limitless demand 
based on demographics for the treatments that we offer. And so 
our growth in oncology is a growth in our drug spend that 
outpaces our revenue growth. And that is why our operating 
margin has actually been declining in the past couple of years 
down to----
    Mr. Collins. Yes, my time has expired. I was going to get 
into, though, with Johns Hopkins the last 2 years of your 
diversion of pricing through the contract pharmacies but that 
will have to wait for another hearing.
    Mr. Griffith. The gentleman yields back.
    I now recognize Ms. Schakowsky of Illinois for 5 minutes 
for questioning.
    Ms. Schakowsky. Thank you. First of all, I want to thank 
the witnesses for their testimony.
    I know 340B is essential to people in my district with 
skyrocketing drug prices or, as the President would say, price 
gouging prices. 340B is literally a lifesaver and not one of us 
opposes transparency. I am certainly not for waste, or fraud, 
or abuse. I am for transparency. But it does raise questions 
when it is the pharmaceutical companies that are the loudest 
complainers about the 340B Program.
    And it is interesting to me that while the pharmaceutical 
companies have argued for transparency for the 340B Program, 
PhRMA has spent millions of dollars to prevent laws that 
require transparency in their own drug pricing. And this leaves 
us blind as we work to lift the burden of crushing drug prices 
and it is well past time that this committee talk about how we 
are going to lower drug prices.
    You know we have no clue when they tell us that all this 
money is going to develop new drugs and for research and 
development, what that is really about. We know about your CEO, 
how much they make. We don't know about theirs. And we need to 
concentrate more on that.
    And I think it is really a dereliction of duty that we 
allow these prices to get so out of control that they do 
imperil the health of people across this country.
    In my district, Advocate Health has used its 340B savings 
to provide support for low-income patients through child 
vaccination programs and the Medication Assistance Program that 
helps people who are uninsured and underinsured, as some of you 
do as well.
    So let me just ask a couple of questions. Each of you 
mentioned very--oh, no, no. I wanted to go to these questions.
    Dr. Paulus, I see that Mission Health used a large number 
of contract pharmacies to dispense 340B drugs. Can you explain 
the benefits of using these pharmacies?
    Dr. Paulus. Yes. So first, I think with respect to contract 
pharmacies, we only have arrangements that include dispensing 
fees. That is an important part of our criteria. Mission 
Health, as an entity, has 62 contract pharmacies but that is 
for six separate covered entities. Mission Hospital, which is 
the largest hospital, by far, has 31 but of those, 16 are mail 
order or specialty pharmacies that haven't had a dollar's worth 
of revenue. So it is an inflated number.
    Two, our distribution entities and there is no revenue 
associated with those; two we own.
    And the total value of Mission Health's contracted 
pharmacies is $7.6 million but the value of that is that, for 
example, at Angel Medical Center, which is one of our rural 
Critical Access Hospitals, patients are provided with vouchers 
to go to those contract pharmacies and receive free medication.
    So the contract pharmacies we view as an extension of our 
own work. Our goal is, either through our own medication 
assistance program or through those contracted pharmacies, that 
no patient goes without free or discounted medications, if they 
need that medication.
    Ms. Schakowsky. Thank you. I am just wondering if any of 
you have witnessed dramatic increases in the cost of a 
particular drug that your patients need that you might want to 
tell us about. I have heard those horror stories from a number 
of doctors in the Chicago area.
    Yes, Dr. Reuland.
    Mr. Reuland. Thank you for the question. I mentioned 
earlier that we have seen seven very common medications. We 
noticed that our spend on them increased 312 percent with a 
volume growth of 12 percent. So it was clearly a price increase 
that we could not explain and these were not medications that 
were easily substitutable with something else.
    Dr. Paulus. If I could just add, you know there is a 
variety of reasons for the quote growth in the programs, one of 
which is prices. And I think the data are a third of the 
savings is due to price changes alone.
    But let me bring up another issue, which is a thank you to 
the pharmaceutical manufacturers. When we compare our 2014 to 
2017 data, there are six drugs that are new that didn't exist 
that comprised over $5 million of spend in 2017.
    So the growth of the program is a multifactorial attribute 
and it is important to look into the detail.
    Ms. Schakowsky. Thank you and I yield back.
    Mr. Griffith. Thank for yielding back.
    I now recognize Mrs. Brooks of Indiana for 5 minutes for 
questioning.
    Mrs. Brooks. Thank you, Mr. Chairman.
    Ms. Banna, we heard about the acquisition by Northside of 
the oncology practices in 2012. Are those two practices 340B 
child sites?
    Ms. Banna. The locations operating as hospital outpatient 
departments are.
    Mrs. Brooks. And when did you register those oncology 
practices for the 340B Program?
    Ms. Banna. I believe it was spring of 2014.
    Mrs. Brooks. And can you talk about the registration 
process? So that is the date that the registration process 
concluded, is that correct, in 2014?
    Ms. Banna. It was April 2014.
    Mrs. Brooks. And about how long does that process take?
    Ms. Banna. To register them?
    Mrs. Brooks. Yes.
    Ms. Banna. You must demonstrate that you are operating them 
as a hospital outpatient department. So if you own a location 
and it appears on your hospital cost report as a hospital 
department, then you request. You bring it in as a child site 
and about a quarter later, you can begin operating it as a 
340B.
    Mrs. Brooks. And are patients that are treated at these 
oncology centers charged a facility fee?
    Ms. Banna. If it is a hospital location, they are billed in 
accordance with hospital standards.
    Mrs. Brooks. And those are billed as hospital sites, then?
    Ms. Banna. Correct.
    Mrs. Brooks. So they would be charged a facility fee.
    Ms. Banna. Correct.
    Mrs. Brooks. And how much is that fee?
    Ms. Banna. I can't quote that.
    Mrs. Brooks. Can you get that for us?
    Ms. Banna. I can, sure.
    Mrs. Brooks. And what other fees are patients charged that 
maybe those patients didn't pay prior to them becoming hospital 
sites? Are there other fees that patients are charged once they 
become hospital sites that they weren't charged previously, 
oncology patients, for example?
    Ms. Banna. I think you know I can't speak to charges that 
are not hospital-based. They are charged commensurate with any 
hospital service area.
    Mrs. Brooks. So are you aware as to what a patient's bill 
might have looked like prior to them being acquired by the 
hospital versus what they are after the acquisition, a 
comparison of the costs?
    Ms. Banna. I understand what hospital charges are, yes. I 
think it is important, though, to state that charges are not 
directly related really to what people pay. People pay based on 
what kind of insurance coverage they have or don't have.
    Mrs. Brooks. And so on the hospital fees and whether there 
are any other fees, are they all included in the one bill or 
might there be an additional separate bill to the patient?
    Ms. Banna. Patients may receive bills for non-hospital 
services.
    Mrs. Brooks. I want to ask each of the panelists what is 
the DSH percentage of your entities and is that for the parent 
entity or the DSH percentage compared to the child sites?
    And I will just start with you, Ms. Banna. What is your DSH 
percentage for your parent entity and how does that compare to 
your child sites?
    Ms. Banna. The DSH percentage is a representation of 
inpatient days, as was mentioned a moment ago. So the child 
sites don't have that percentage but our parent has a 16 
percent ratio.
    Mrs. Brooks. And how about you, Mr. Reuland?
    Mr. Reuland. Johns Hopkins Hospital is 18.97 percent.
    Mrs. Brooks. OK, Dr. Paulus.
    Dr. Paulus. We are between 15 and 16 percent across all 
sites.
    Mrs. Brooks. Mr. Gifford.
    Mr. Gifford. That is a requirement that we are not required 
to adhere to.
    Mrs. Brooks. OK.
    Mr. Gifford. That is not a part of the Ryan White----
    Mrs. Brooks. OK, thank you.
    Ms. Veer.
    Ms. Veer. Similar to Mr. Gifford, our eligibility is based 
on our approved scope of project under HRSA.
    Mrs. Brooks. And so for those of you that maintain the 
percentages, has that percentage fluctuated over the years? And 
if so, what kind of fluctuation have you seen?
    Dr. Paulus.
    Dr. Paulus. I couldn't quote that off the top of my head. 
It has been relatively consistent.
    If I might add two comments about the oncology practices, 
our integration in our market has largely been driven by two 
things. One is physicians who, because of the same demographic 
challenges that we face, find it hard to exist in that 
marketplace. And by becoming part of a system and being able to 
be paid a salary, as an example, are able to do that.
    You raised fair points, but one of the additional benefits 
is all of those patients in that new setting are eligible for 
all of our charity policies, which did not exist in those 
practices previously.
    The other point is you know we are being pressured by 
everyone, including the Federal Government and others, to form 
integrated systems to coordinate care across that network.
    Mrs. Brooks. Right, of course.
    Mr. Reuland?
    Mr. Reuland. I don't know the history of our roughly 19 
percent number. We could, I am sure, provide that.
    Our oncology, as I mentioned, is not a growth based on 
acquisition of any practices. It is as a comprehensive cancer 
center. As new therapies come along, as Dr. Paulus pointed out, 
they often bring some very nice promise but they certainly 
bring a heavy cost with them and that is part of our reality.
    Mrs. Brooks. Thank you. My time is up. I yield back.
    Mr. Griffith. Thank you. I appreciate that very much.
    I now recognize Dr. Ruiz from California for 5 minutes for 
questioning.
    Mr. Ruiz. Thank you very much, Mr. Chairman.
    As you know, I have spent a lifetime trying to figure out 
how to provide care for underserved communities and I just want 
to remind everybody of the big picture. It is easy to get lost 
in the details but let's just keep the big picture in mind. We 
are talking about populations with severe barriers to accessing 
the healthcare services they need to live healthy and 
fulfilling lives.
    We are talking about communities that exist with one doctor 
per 9,000 residents, like in certain areas in my district. We 
are talking about catchment areas, where even though you may be 
in a big tertiary care academic institution, they are still 
hard to read for whatever reason. So just the mere existence of 
these clinics or programs in these communities is a benefit, a 
very vital important benefit. And on top of their existence, 
whether they have to pay the electricity bill or whether they 
pay their multiple salaries to keep their doors open, they also 
do outreach, and public health education, and programs, and 
prevention programs, and education, and all these benefits that 
the underserved communities exist.
    There is a community clinic Desert AIDS Project in my 
district, you might be familiar with them, Mr. Gifford, who do 
amazing work but they provide critical wraparound services and 
lifesaving treatment programs. They exist in narrow margins and 
the money they have been able to save with 340B Programs allows 
them to provide hepatitis C medications, which we know is very 
expensive.
    But in addition to that, the cost savings allows them to 
provide the nutrition that augments the support that the 
patients need, allows them to providing housing that we know is 
a critical factor in a patient's ability to recover from the 
AIDS or having the HIV infection.
    So these are very important things that oftentimes get 
missed in these conversations. So I think the real question 
here is how do we measure value of the cost savings of the 340B 
system. And it has been very misleading to hear that the only 
way that we measure this is charity care. And since you know 
that charity care is going down, meaning that that was an 
active choice by hospitals to make, while their profits are 
going up is very misleading because we know that uncompensated 
care has gone down because the number of insured has gone up by 
20 million in this country thanks to the Affordable Care Act.
    But that doesn't mean that families aren't still 
struggling. That doesn't mean that there is more residual 
uncompensated care out there that we need to handle.
    So the fact that clinics and hospitals are expanding to 
more communities is a good thing. The fact that you are 
bringing in patients or oncology clinics, for example, that 
otherwise would be inaccessible through other healthcare 
systems into your mission-driven hospital is a good thing. So 
now your patients have access to oncology care. For example, 
the poor and struggling working families also get cancer. They 
also need the medications. They also need care.
    And I think it is misleading to insinuate that you decided 
to purchase a clinic so that you can dive into the 340B 
Programs to acquire more money to then line the pockets of CEOs 
and leadership. So let me just ask you point blank. Did you do 
that? What was the reason for you purchasing some of these 
oncology clinics, Dr. Paulus?
    Dr. Paulus. Yes, as I mentioned just a bit ago, for us it 
was a matter of maintaining oncology services in the region and 
getting those clinics available in the 18 diverse and 
mountainous counties.
    Mr. Ruiz. So keeping oncology services for the patients in 
your catchment area that you want to serve.
    Ms. Veer?
    Ms. Veer. We don't operate oncology services. However, I 
will say the next to the last site that we opened was opened at 
the request of a local hospital that 75 percent of their 
emergency visits were ambulatory care-sensitive. I can give the 
example of one patient who had 11 visits down to none.
    Mr. Ruiz. Well, yes. How do you measure the ability to use 
some of the cost savings to go into the community to provide 
nutrition classes, exercise classes, prevention, education for 
diabetics knowing, that by them participating in these 
programs, they will prevent going blind, they will prevent leg 
amputations, they will prevent costly renal insufficiency and 
hemodialysis? So how do we measure the true value of these 
cost-saving programs that allow you to do more outreach into 
underserved communities? And that is where the real problem 
lies. If we are just narrowly focused on uncompensated care, 
then we are missing the big picture here.
    So I think we need to expand services. We need to empower 
the clinics and hospitals to do more outreach into more 
underserved areas to provide more lifesaving care that will 
help prevent rising costs for the emergency care that they are 
going to need if they don't get those services to begin with.
    Thank you very much.
    Mr. Griffith. The gentleman yields back. I appreciate.
    I now recognize Mr. Sarbanes of Maryland.
    Mr. Sarbanes. Thank you, Mr. Chairman, and thank you for 
allowing me to participate in the hearing today.
    I want to thank the panel. Your testimony is, obviously, 
very critical and you have, I think, seen that there is broad 
and deep support for the 340B Program on both sides of the 
aisle. And I want to thank all of your institutions for the 
contributions you are making at the community level to address 
the situation of vulnerable populations and sort of change the 
underserved vulnerable populations and to serve vulnerable 
populations.
    I come with a very biased, in the positive direction, view 
of Johns Hopkins and the role that it has played in Baltimore 
City, having watched that my whole life.
    Dr. Reuland, I think you said you started in 1990 at Johns 
Hopkins. So in 1989, when I returned to Baltimore from school, 
I became involved in a program in East Baltimore, a community-
based education and health initiative. And one of the reasons 
the health component was so critical to that--and we were 
working with Dunbar High School and Lombard and Dunbar Middle 
Schools and other schools that you are familiar with--one of 
the reasons the health piece was so critical is the impact on 
education of children in that community from asthma, from lead 
paint poisoning was significant. And we didn't think we could 
bring a kind of holistic response in needs of those children 
without having the health piece right in the center of it. 
Hopkins has always stood up and was a full partner in that 
effort.
    So I am going to ask you to maybe go over again in a little 
more detail some of the services that the 340B Program savings 
have allowed Hopkins to provide in the community. Why don't you 
start by talking about what you have been able to do to address 
the issues of asthma and lead paint poisoning? I know you have 
the Johns Hopkins Children's Center. There has been a lot of 
innovation there. If you could speak to that, I would 
appreciate it.
    Mr. Reuland. Thank you for joining us and thank you for the 
question, Mr. Sarbanes.
    The presence in the schools is something that is, as you 
have pointed out, very important. I was talking with Dr. Connor 
the other day, one of our pediatricians who works in one of the 
schools in Baltimore. And about 1500 elementary and middle 
school kids in the school and she estimates that 30 percent of 
them may have asthma. And so the steady presence there is 
immediate diagnostics, sometimes nebulizer treatments right 
there on the spot to treat them, rather than sending them to an 
emergency department. She thinks in the first year she 
prevented 75 emergency visits just with that program alone. And 
so that is an example of a kind of thing that we are very proud 
of.
    And you are right, pairing the health with the education, 
she thinks we prevented 167 absences from school as a result of 
asthmatic complications. So, a very strong contribution.
    The other school I will mention is, you are familiar, but 
others may not be, with the development work to the immediate 
north of our campus a very troubled area that has been rebuilt. 
The Henderson-Hopkins School is something we helped establish 
as a part of that redevelopment initiative. And it has been an 
extraordinary success so far. If you were to see that area back 
in 1989, when you referred to, and look at it today, it is a 
startlingly better story.
    Mr. Sarbanes. Let me ask you to speak as well. I have got 
about a minute left but, obviously, every community across the 
country and certainly every congressional district has 
experience with this opioid crisis. Baltimore has very special 
challenges with respect to heroin and opioid addiction crisis. 
And maybe you could speak on behalf of hospitals across the 
country of who benefit from the 340B Program in terms of their 
ability to respond to that crisis in those communities, which 
is absolutely critical right now.
    Mr. Reuland. And I am happy to respond and others may want 
to contribute. But we are absolutely seeing an increase in 
opioid dependence. It is an estimate of about 45,000 residents 
in Baltimore have a dependence. And in an emergency department, 
as Dr. Ruiz knows, patients will present often having overdosed 
and will be reversing that with naloxone and trying to bring 
them back. And as more powerful substances are available on the 
streets, we are doing more and more of that.
    The aftercare, the recovery and management of addiction, I 
mentioned earlier some of the wraparound services we provide, 
so that not only can we treat the patient with standard 
therapies but provide them with supportive housing on the 
outside so they don't go back quite to that same neighborhood. 
It is that kind of thing that I suspect all of us do at some 
level.
    Mr. Sarbanes. I appreciate your testimony. I thank all of 
you for what you are doing in your various communities.
    I yield back.
    Mr. Griffith. I thank the gentleman for yielding back and 
if you all can bear with us a few more minutes, I have a couple 
of additional questions.
    So I am going to recognize myself for an additional 5 
minutes. And Ms. DeGette may wish to but she is going to play 
that by ear.
    So I am going to feed off of what Mr. Sarbanes was just 
asking about and this committee has important bipartisan work 
underway to see how we can leverage federal resources and 
authorities to better combat the opioid crisis.
    As part of our work, it is important to understand how all 
federal programs intersect and what their interest is with the 
crisis that has left virtually no American family or community 
untouched. That being said, can each of you identify what 
percentage of the 340B prescription opioids represents as a 
percentage of your program and can you detail for us what steps 
might be in place to prevent diversion or misuse of these 
drugs, once they are dispensed to the patients?
    I will start with you again, Ms. Veer. And if we could be 
quick.
    Ms. Veer. Sure. I don't have the exact percentage but I 
could provide that in writing.
    Mr. Griffith. OK.
    Ms. Veer. I can tell you that we use medication management 
contracts with our patients. We do standard drug testing to 
make sure that it is not being diverted.
    Mr. Griffith. I appreciate it.
    Mr. Gifford.
    Mr. Gifford. I also can provide the data on the percentage 
of prescriptions. We do provide medication management therapy 
and we do a lot of counseling with our patients and clients 
about it.
    But on this issue of opioids and fighting the opioid 
epidemic, this is one of the problems with the Ryan White 
constricting language. We cannot use 340B savings to provide 
Narcan to somebody to save them from an overdose and a clear 
death. And that is one of the examples that I would hope this 
committee would look to expanding our ability to fight both the 
HIV epidemic and the opioid epidemic. It is a federal 
regulation that is inhibiting our ability to fight the opioid 
epidemic.
    Mr. Griffith. That is interesting information. I asked Ms. 
DeGette and she didn't know that either. I was not aware of 
that. So thank you for bringing that to our attention.
    Dr. Paulus?
    Dr. Paulus. I don't know the exact numbers. I know that it 
is less than one percent of our revenue.
    What we have done is academic detailing for each of our 
practices to reeducate them about the prescription evidence-
based best practices for opioids. We have supported providing 
free Narcan for our community. And on any given day, we have 
between 37 and 60 behavioral health patients being brought into 
our emergency department that are uncompensated that relate to 
the tragedy that is occurring.
    If I could ask one other thing like that, we also provide 
support to a free clinic that provides medication assistance 
and education but free clinics don't qualify for 340B either. 
So that is a parallel.
    Mr. Griffith. I appreciate that.
    Mr. Reuland. I also don't know our precise percentage but 
we certainly have plenty of programs in place to prevent 
diversion.
    Mr. Griffith. And if you all could just get us that 
information, as some others have offered, that would be great.
    Ms. Banna. Agreed, and I would argue or articulate for us 
the opioid epidemic is striking all patient populations. In our 
case, you see it affecting the extension of behavioral health 
services dramatically and, certainly, our babies. I mentioned 
we have a really high population of special care babies in our 
nursery. The opioid epidemic has increased their length of 
stay. Many of those babies are Medicaid babies. That is part of 
what contributes to our DSH percentage.
    Mr. Griffith. And another subject that we will probably 
have to touch on another day because, in my area, Bristol, 
Virginia, Tennessee, the newspaper ran a series of articles on 
the problems that we are having in our region with those 
infants born already addicted.
    As a follow-up to my first round of questions, I want to 
discuss again how each of you calculate your savings. Ms. Veer 
and Mr. Gifford, I believe I understand the answers you gave. I 
understand Mission and Johns Hopkins use of the GPO price to 
calculate their savings, which you get by comparing a wholesale 
manufacturer price. You get that GPO from them.
    Following up on Northside, it appears, from what I have 
been able to read and discern, that you all have chosen not to 
use the GPO price or you use some other mechanism. Can you 
explain it to me and then explain why?
    Ms. Banna. We are actually comparing the GPO price. We are 
comparing the average unit paid on drugs in 340B oncology 
clinics to those paid in non-340B clinics where GPO is 
applicable.
    So it is, effectively, 340B pricing to GPO pricing.
    Mr. Griffith. But you all are taking an average. I think 
what everybody else is doing is they are saying we are buying 
Drug A and Drug A costs $10 and under 340B we save that $10. 
And you all are doing an average across the board. Is that 
correct?
    Ms. Banna. That is correct. What we do is monitor the 
program's effect in totality. Each individual drug, there are 
some that see bigger savings than others on a per unit but the 
units that you purchase move day by day, depending on the 
patients that appear and the drug sizing and such that are 
sold.
    Mr. Griffith. I am just curious why you all think that is a 
better method.
    Ms. Banna. Right. Oh, so I guess we consider it to be less 
noisy. We are monitoring the total program impact across the 
board.
    Mr. Griffith. My additional 5 minutes is up.
    Ms. DeGette, I am happy to yield to you. Did you have any 
additional questions?
    Ms. DeGette. No.
    Mr. Griffith. All right. Oh, OK. Apparently Dr. Burgess is 
attempting to come down. Do we know how close he is? You don't. 
OK.
    Well my follow-up material is here that I have to do.
    I do appreciate all of you all being here today. If Dr. 
Burgess walks in, I will yield some time to him but I do 
appreciate you all being here today. I know it takes a lot of 
time both to get here, get back, and to spend your time 
answering questions of a lot of different folks with slightly 
different opinions.
    OK, in conclusion, having thanked you all, I do remind the 
members that they have 10 business days to submit questions for 
the record and then I would ask all the witnesses to agree to 
respond promptly to the questions that members ask.
    That being said, this committee is adjourned.
    [Whereupon, at 12:24 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
    
    
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