July 6, 2009 – Momentum to strengthen the 340B drug discount program grew in June when the Senate rolled out S. 1239, the 340B Improvement and Integrity Act of 2009, and promptly included language from the bill in health reform legislation that President Obama has told Congress he wants on his desk by the end of the year.
The legislation introduced by Senators Jeff Bingaman (D-N.M.), John Thune (R-S.D.) and Kirsten Gillibrand (D-N.Y.) mirrors language in the Affordable Health Choices Act, the health reform bill introduced by Senator Ted Kennedy (D-Mass.) in May. That bill – currently being considered by the Senate Health, Education, Labor, and Pensions Committee – is expected to be taken up by the full Senate as part of a larger healthcare reform package later this summer.
Sen. Thune believes the bipartisan nature of the Senate’s 340B legislation should be used as a model as Congress seeks to overhaul the nation’s healthcare system. “I will work with colleagues on both sides of the aisle to advance common-sense, bipartisan legislation like this bill,” the high-ranking Republican said.
The legislation would extend 340B discounts to the inpatient setting in more than 800 disproportionate-share hospitals across the United States. It would also qualify freestanding children’s hospitals, critical access hospitals, and rural referral centers/sole community hospitals with a Medicare disproportionate-share adjustment percentage of more than 8 percent.
Sen. Bingaman, a senior Democrat who is playing a lead role in the health reform effort, is spearheading the 340B push in the Senate.
“Communities across the New Mexico and the country rely on the healthcare ‘safety net’ to provide care for low-income, uninsured, and underinsured patients,” he said. “These safety-net providers are struggling to provide basic pharmaceutical care to those least able to afford it.”
By extending 340B discount prices to inpatient drugs, the legislation would help safety-net hospitals better care for such patients, he added.
Legislation strengthens hospital budgets
While the debate about rising drugs costs tends to focus on consumers, it’s important to remember that higher costs also burden hospitals serving the poor and uninsured, noted Sen. Thune.
In his home state of South Dakota, rural hospitals serve as a lifeline to thousands of residents in medically underserved areas, he said. Meanwhile, the rising cost of drugs continues to squeeze their budgets, he said.
Sen. Gillibrand said 340B reform is needed more than ever because of the financial challenges facing safety-net hospitals and many of their patients.
“In these tough economic times, we need to do everything we can to make life-saving prescription drugs affordable for New York’s low-income families,” she said.
The legislation also proposes new integrity provisions for manufacturers and covered entities participating in the 340B program. The bill requires the U.S. Department of Health and Human Services (HHS) to develop a process for improving compliance by both the buyers and sellers of discounted drugs. A new dispute-resolution procedure would also be established for manufacturers accused of overcharges and for covered entities accused of improprieties.
In addition, S. 1239 would allow hospitals to access 340B ceiling prices for covered drugs via the Office of Pharmacy Affairs Web site.
340B reform legislation boost for Medicaid
S. 1239’s inclusion in Sen. Kennedy’s healthcare reform legislation is in part due to the fact that it represents a net savings to the financially imperiled Medicaid program. Language in the bill requires HHS to develop a methodology for hospitals to share with Medicaid the savings accrued from administering discounted drugs to Medicaid patients.
Similar language was included in the 340B reform bill introduced in January in the U.S. House of Representatives, H.R. 444. But while the House bill includes a defined formula hospitals would use to determine how much of their Medicaid savings should be shared with Medicaid, the Senate bill’s sponsors said such details are better left to regulators. The methodology for sharing savings should be determined after consultation with the Health Resources and Services Administration and Centers for Medicare & Medicaid Services, both agencies within HHS.
The House released a preliminary draft of its own version of healthcare legislation on June 19. While the draft included language to extend 340B discounts to free-standing children’s hospitals, critical access hospitals, sole community hospitals, and rural referral hospitals, it did not include the provision extending discounts to the inpatient setting.
The House bill, which will be considered by the Committees on Energy & Commerce, Education & Labor, and Ways & Means, is expected to be formally introduced in July and brought before the full House for a floor vote during the first week of August.