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Senator Grassley Continues Scrutiny of 340B Program with Letter to Walgreens

Christopher H. Schott

Christopher H. Schott,

Washington, D.C.

Alice Valder Curran

02 August 2013
On Wednesday, Senator Chuck Grassley (R-Iowa) sent a letter to the President and CEO of Walgreens, requesting detailed information to “help better understand Walgreen’s participation as a contract pharmacy” in the 340B program.
Senator Grassley Continues Scrutiny of 340B Program with Letter to Walgreens

The interest in Walgreens appears to have been prompted by statements in a Walgreens slide presentation and on the LinkedIn page of a Walgreens employee regarding revenues generated by Walgreens’ 340B contract pharmacy business. The slide presentation, entitled “Innovative Care Delivery Models: Pharmacy & Health Systems Collaborations,” dated February 28, 2012, states that Walgreens can help “Generate revenue from your 340B patients.” The LinkedIn page of Timothy Hong, “Senior 340B Inventory and Reconciliation Analyst” with Walgreens, states that Walgreens’ involvement in the 340B program “is projected to add a minimum of $250 million in incremental revenue over the next 5 years” and can “Optimize client’s 340B program, so they can be more profitable while lowering Walgreen’s liability.”

Senator Grassley states in his letter that the “intent and design of the [340B] program is to help lower outpatient drug prices for the uninsured.” He expresses concern regarding the increase of contract pharmacy arrangements in the 340B program, noting that the 340B program “is not intended to subsidize pharmacies that team up with covered entities to turn a profit.” In particular, Senator Grassley focuses on the role of Walgreens, noting that “Of the 7,000 contract pharmacies, 5,400 are Walgreens.”

Senator Grassley states that, “Covered entities have long argued that the 340B program was intended to assist nonprofit safety-net providers to, ‘stretch scarce Federal resources,’ in serving the underserved populations in their communities.” He then asks, “why should Walgreens, as a for-profit corporation, financially benefit from such a program?”

The information Senator Grassley requests from Walgreens includes a list of all 340B covered entities with which Walgreens has an active contract pharmacy agreement, “the distance between each participating Walgreens and the 340B covered entity,” and a summary of all profits generated as a result of participating in the 340B program as a contract pharmacy. Senator Grassley also asks whether Walgreens has “a transparent process for reinvesting money back into underserved communities generated by being a contract pharmacy in the 340B program? If not, why not?”

The letter is the latest in a series of letters that Senator Grassley has sent to stakeholders regarding the 340B program, including Duke University Health System, University of North Carolina Hospital, and Carolinas Medical Center.

Christopher H. Schott

Christopher H. Schott,

Washington, D.C.

Alice Valder Curran

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