March 18, 2010 – House Democratic leaders released what they hope is the final health care reform bill on March 18. The House is scheduled to consider the bill this weekend. If the bill is approved, it will move to the Senate, where Senate leaders hope to pass and send it to the White House for President Obama’s signature by the end of next week.
The bill contains numerous 340B provisions, including:
No inpatient extension. Despite being included in both the Senate’s and the Obama administration’s health care reform plans, the 340B drug discount extension to the inpatient setting has been removed from the bill the House is expected to consider over the weekend.
New 340B Covered Entities. The bill expands 340B eligibility to free-standing children’s hospitals, free-standing cancer hospitals, critical access hospitals, sole community hospitals and rural referral centers. While children’s hospitals were recently added to the program under a new federal guideline, this legislation adds the children’s hospitals and the other facilities to the list of covered entities under the Public Health Service Act, which entitles them all to benefits such as access to nominally priced drugs and voluntary inpatient discounts. However, certain “orphan drugs” will be ineligible for 340B discounts for these new covered entities. Drug manufacturers must continue to provide 340B discounts for orphan drugs for existing covered entities such as DSH hospitals.
Increase in 340B discounts. Increases the mandatory Medicaid drug rebate percentage on brand name drugs from 15 percent to 23 percent. Since the 340B price is tied to the Medicaid rebate, it is likely to result in savings to 340B providers. The amount of such savings is unclear since the Average Manufacturer Price (AMP) is expected to rise due to changes in the AMP pricing formula.
Protects 340B providers when billing Medicaid managed care. Manufacturers are protected under federal law from having to give both 340B discounts and Medicaid rebates on the same drugs under the Medicaid fee-for-service program. A provision of the bill extends Medicaid rebates to drugs prescribed through Medicaid managed care health plans, and 340B provider groups worked hard to ensure that 340B providers were protected from any duplicate discount prohibition under this new provision. They were successful. The legislation protects 340B providers from being required to bill Medicaid managed care plans at acquisition cost. Without this protection, 340B providers would have been stripped of their pharmaceutical savings in this setting.
Helps Seniors in the Medicare Part D Donut Hole. The reconciliation bill helps Part D prescription drug plan beneficiaries in the coverage “donut hole” by increasing the 50 percent discount for brand-name drugs that manufacturers had already agreed to pay under an agreement with the White House to 75 percent for both brand-name and generic drugs. The remaining 25 percent of drug costs in the donut hole would be picked up by the beneficiaries.
New integrity provisions for manufacturers and covered entities:
- Availability of 340B prices. The bill would require that 340B covered entities have access through the Office of Pharmacy Affairs (OPA) Web site to the actual 340B ceiling prices verified by the Secretary of Health and Human Services (HHS).
- New integrity provisions for manufacturers and covered entities. HHS is required to develop a system to ensure accurate pricing by manufacturers under the program. The government is also required to perform spot checks of manufacturer sales transactions and inquire into the cause of pricing discrepancies, and ensure corrective action. As to covered entities, they will be required to annually update their contact information on the OPA Web site. In addition, the Secretary is required to develop more detailed guidance on billing Medicaid. Covered entities will be subject to fines if they have engaged in knowing and intentional violations such as drug diversion.
- Mandatory credit or refund process. The bill requires the HHS Secretary to establish procedures for manufacturers to issue refunds to covered entities and to oversee those refunds when there is an overcharge. Manufacturers would be required to explain to the Secretary why and how the overcharge occurred and how refunds are calculated and will be issued.
The Monitor will be providing more details on the bill shortly.