November 5, 2009 – Advocates for safety-net hospitals were stunned to learn last week that the House of Representatives had unexpectedly eliminated language from its health care reform bill that would extend 340B discounts to inpatient drugs.
While the expansion of the program to thousands of new health care facilities and programs did make the bill, the much-anticipated extension of the program to the hospital inpatient setting was dropped at the last minute. Safety-net hospitals are now scrambling to get the inpatient language restored in the final version of the health reform bill.November 5, 2009 – Advocates for safety-net hospitals were stunned to learn last week that the House of Representatives had unexpectedly eliminated language from its health care reform bill that would extend 340B discounts to inpatient drugs.
The Congressional Budget Office (CBO) has concluded that by extending the 340B discount to the inpatient side for hospitals that already participate in the program on the outpatient side, lawmakers would save the federal government as much as $1.7 billion over 10 years. State Medicaid programs would save millions more. Despite that, House staffers dropped the inpatient provisions from their latest draft.
The 340B inpatient provision was approved by the House Energy and Commerce Committee in July as part of a comprehensive health care reform package. The language was stripped from the bill once it was merged with health reform legislation passed by the House Education & Labor, and Ways & Means committees.
The provision’s omission from the latest version of the House bill is surprising because stand-alone legislation that includes the same inpatient language and expands the program to new covered entities (H.R. 444) enjoys wide bipartisan support. Close to 100 members of the House signed on as co-sponsors of that bill.
During the drawn-out debate over health reform bill over the summer, there was also very little opposition to the inpatient measure when the legislation was discussed.
The legislation would come at the expense of drug manufacturers, however, which have already pledged $80 billion toward health reform — and may see their bill increase beyond that.
Hospitals could lose millions in future savings
Safety Net Hospitals for Pharmaceutical Access (SNHPA) and its hospitals are working with its allies to try to restore the inpatient proposal to the health care reform agenda. SNHPA, the National Association of Public Hospitals and Health Systems, and the National Association of Children’s Hospitals fired off a letter to House Speaker Nancy Pelosi (D-Calif.) last week, urging her to restore the inpatient provisions.
Early this week, 31 House members also signed a letter to Pelosi, Majority Leader Steny Hoyer (D-Md.), Energy and Commerce Committee Chair Henry Waxman (D-Calif.), and the House point man on health care reform, Rep. John Dingell (D-Mich.), urging them to re-insert the 340B language.
“There is no rational policy for requiring 340B hospitals to pay more for inpatient drugs than outpatient drugs,” the lawmakers wrote.
The potential elimination of the inpatient language — which remains in the Senate HELP Committee legislation — could mean the likely loss of $25 million in future savings annually for the New York City Health and Hospitals Corp. alone. Clarian Health Partners of Indianapolis projects it would forgo up to $15 million in projected annual savings, and Henry Ford Hospital in Detroit says it could lose about $5 million.
Ed Szandzik, pharmacy director at Henry Ford Hospital, said he hopes lawmakers will restore the 340B inpatient provision once they realize how critical the immediate needs are in cities such as Detroit, where unemployment is approaching 30 percent and Medicaid only covers patients earning less than $11,000 annually.
“Extending 340B drug pricing means savings will be spent on immediate patient needs, rather than on health reform provisions that won’t reach safety-net populations like we have in Detroit for a number of years,” Szandzik said.
The 340B reform provisions, including the inpatient discount expansion, remains in the Senate health reform bill that lawmakers are expected to vote on later this month. If the inpatient language is re-inserted it could either happen through the amendment process in the House, or when the House and Senate bills are reconciled in conference committee later this fall — should each bill pass their respective chamber.
PhRMA also takes big hit in House
The Pharmaceutical Research and Manufacturers of America (PhRMA), which represents large pharmaceutical and biotechnology companies, promised President Obama and Senate Finance Chairman Max Baucus (R-Mont.) in June that its members would contribute $80 billion toward the reform effort.
House Democrats, however, later pointed out that they never made such deal with the drug industry. Indeed, the latest House health reform bill could cost drug makers more than $150 million over the next ten years, a PhRMA spokesman told PharmaTimes last week.
Both the House and Senate versions of health reform include an increase in the Medicaid rebates drug makers pay on brand-name drugs from 15.1 percent to 23.1 percent of average manufacturer price.
Such rebate increases are also likely to translate into an increase in the discounts for 340B hospitals. The bills would require manufacturers to also pay new rebates on drugs dispensed to Medicaid managed care enrollees.
But this did not prove enough for House members. In addition, their bill would:
- For the first time give the Secretary of Health and Human Services the authority to negotiate with manufacturers over discounts, rebates, and prices charged Part D plans.
- Require manufacturers to pay rebates on drugs dispensed under Medicare Part D to individuals enrolled in Medicare and receiving full benefits under Medicaid — a government saving of $60 billion over 10 years.
- Provide 50-percent discounts on brand name drugs dispensed to Medicare enrollees during each enrollee’s Medicare Part D coverage gap.
- Allow Part D plans to eliminate co-payments for generic drugs to encourage use of the generic drugs that are not discounted by the manufacturers.
House leaders project that the Part D donut hole will be eliminated entirely by 2019.
PhRMA Senior Vice President Ken Johnson said in a statement that his organization shares the goal of closing the donut hole, but warned that the House legislation could lead to a 20-percent increase in Part D premiums, citing a report by the CBO.
“What’s more, according to CBO, imposing a mandatory rebate on Part D prescription drugs would reduce incentives to invest in the research and development of new discoveries for diseases — such as Alzheimer’s and Parkinson’s disease — that disproportionately affect the elderly,” Johnson said. “This could have devastating consequences for millions of American patients and their families.
340B expansion, more integrity on the horizon
The merged House bill does keep 340B reform language that would expand the program to also include about 10 free-standing cancer hospitals, more than 1,000 small critical-access hospitals, Medicare-dependent rural hospitals, rural referral centers, sole community hospitals, and mental health and substance abuse clinics.
It also includes program integrity provisions that would give the Office of Pharmacy Affairs (OPA) greater authority to monitor manufacturer and covered entity non- compliance with program rules. OPA is asked to establish refund procedures and issue civil fines when manufacturer overcharges are found to have occurred and also gives the government the authority to fine covered entities for infractions.
And it puts OPA’s dispute resolution procedures into statute for the first time.
While 340B advocacy groups are supportive of the new integrity measures, they were disappointed to discover that OPA’s requirements to step up oversight of the program were significantly watered down in the revised House version of the bill.