By Rob Recklaus
Calling the current 340B drug discount program too limited in scope and application, U.S. Rep. Bobby Rush re-introduced the 340B Program Improvement and Integrity Act Jan. 9. The lead co-sponsors of the bill are Reps. Jo Ann Emerson (R-Mo.) and Bart Stupak (D-Mo). Supporters of the bill say that the legislation may, for the first time in its 5-year history, have a good chance of passing this Congress.
H.R. 444 would let hospitals use the 340B discount for drugs dispensed in an inpatient setting, providing millions of dollars in savings for financially strapped hospitals and clinics that serve uninsured and underinsured patients. Today, the discount only applies to outpatient drugs
The bill would also allow certain rural healthcare facilities, such as critical-access hospitals, sole community hospitals, and rural referral centers, into the drug discount program. Children’s hospitals – which have been in limbo for three years after implementation stalled – would also get the final go-ahead through a language clarification in H.R. 444.
In addition, the bill would allow 340B-covered entities to enter into contracts with multiple pharmacies for providing drugs purchased with the 340B discount. Today, they may only contract with a single pharmacy which has created access challenges for patients and providers.
A more efficient, fairer 340B Program
Rep. Rush, a senior Democrat from Illinois, believes the current 340B program was poorly conceived, especially when it comes to the outpatient-only provision.
The “policy of providing safety-net hospitals discounts on life-saving drugs for vulnerable outpatients but not for vulnerable inpatients makes no sense policy-wise,” he said before a meeting of the House Energy and Commerce Committee. The committee has jurisdiction over the 340B program.
Rep. Rush is not the only lawmaker who believes the program has shortcomings. U.S. Rep. Bart Stupak (D-Mich.) said that by limiting the drug discount to the outpatient setting, the law places an unreasonable administrative burden on hospitals in addition to depriving them of savings. “Hospitals need to maintain two pharmacy inventories,” he noted.
Don Shamblin, clinical information director for Tampa General Hospital in Florida, said the bill will also make it easier for 340B providers to follow the rules.
“H.R. 444 allows clarification of compliance, which a lot of people struggle with,” Shamblin said. By eliminating the problem of double inventories and having to bill patients at different prices, it would reduce administrative costs and “provide hospitals with a known, federally guaranteed price” on inpatient drugs,” Shamblin noted.
While there’s broad support among 340B hospitals for the legislation, drug makers have opposed efforts to enact similar legislation over the past several years. They are concerned with what they call “price controls” and have warned Congress about the dangers of expanding government pricing programs.
Extending federal discounts to the inpatient setting and allowing more hospitals into the 340B program would result in a major expansion of government control over prescription drug pricing, they say. However, a recently published report by the University of Minnesota’s PRIME Institute found that the bill would have an impact of only 0.38 percent to 0.69 percent of total drug industry sales in the U.S.
Medicaid gets a cut
In addition to expanding the reach of the 340B discount, H.R. 444 includes language that would improve both manufacturer and covered entity compliance. For example, the U.S. Department of Health and Human Services would be required to develop a system that program administrators would use to verify the accuracy of manufacturers’ ceiling prices.
All 340B prices would be published in a password-protected section of the Office of Pharmacy Affairs’ Web site where covered entities could check and confirm that they’re not being overcharged. The legislation would also strengthen a dispute resolution process for providers and manufacturers that believe they were overcharged for drugs purchased under the 340B discount.
In addition, the bill makes certain that the Medicaid program benefits from the extension of the program to the inpatient setting. 340B hospitals would have to share with Medicaid a portion of the additional savings they gain from the lower price. Medicaid agencies would request an annual credit from the hospital each year for the savings that they received on drugs purchased for their patients.
Safety Net Hospitals for Pharmaceutical Access, which represents 500-plus hospitals in the program, estimates the bill would save Medicaid more than $200 million a year. Hospitals would be able to retain the full savings for their non-Medicaid patients.
Advocates claim that even after the credit, hospitals will achieve substantial savings if this legislation becomes law. They will also benefit from provisions that improve the 340B program’s integrity and efficiency, they say.
The economic downturn has been devastating for the healthcare safety net and extending use of the 340B program would provide much-needed relief, Rep. Rush says. “Our 340B legislation would help stimulate the economy by providing savings to states and safety-net hospitals for the benefit of low-income patients,” he said.
Lawmakers lend ear to H.R. 444
The bill’s prospects improved when House Energy and Commerce Chairman Henry Waxman’s pledged to work with Reps. Rush and Stupak during his committee’s consideration of President Obama’s economic recovery plan.
Rep. Rush withdrew his amendment to attach his 340B legislation to the economic stimulus bill when Chairman Waxman gave him assurances that H.R. 444 would get consideration on “some other legislation.” The chairman expressed “a strong willingness to work on this issue” and other prescription drug matters.
Thirty-five members of the U.S. House of Representatives have co-sponsored Rep. Rush’s legislation thus far. Senators Jeff Bingaman (D-N.M.) and John Thune (R-S.D.) introduced a similar bill last year and are expected to introduce legislation in the U.S. Senate soon.
“Mr. Rush’s legislation goes a long way towards ensuring [that] safety-net hospitals in this country can continue their mission of providing all patients healthcare regardless of their ability to pay,” Rep. Stupak said.