July 8, 2010 – The U.S. House has passed a supplemental funding bill for the wars in Iraq and Afghanistan that includes language to amend the definition of the average manufacturer price (AMP) of drugs that was part of the health care reform bill signed by President Obama in March.
The amendment to H.R. 4899, commonly referred to as the war supplemental bill, was transferred from the “tax extenders” bill that foundered in the Senate in late June. AMP is used to calculate manufacturer Medicaid rebates, 340B discounts and federal upper limits on Medicaid pharmacy reimbursement for generic drugs. The House passed H.R. 4899 shortly before its Independence Day break and it is scheduled to be taken up by the Senate when Congress reconvenes the week of July 12.
The health care reform bill eliminated discounts, fees and payments for certain drugs from the calculation of AMP. Some drug industry officials took the position that the change meant that certain sales of injectable, infusible and inhalable drugs were no longer counted toward AMP and thus no longer subject to Medicaid rebates or 340B discounts. The amendment to the war spending bill clarifies that non-retail sales of these drugs will continue to be included in AMP. The Congressional Budget Office estimates the AMP provision will save the federal government $2.1 billion over the next 10 years.
Two other amendments to the tax extenders bill that are being closely followed by the 340B community were not carried over to the war spending measure. One would allow children’s hospitals to continue buying outpatient orphan drugs at their 340B prices. The other would create a limited discount program called 340B-1 for drugs administered or dispensed to hospital inpatients lacking health insurance. The fate of both remains uncertain.