August 11, 2010—President Obama signed a Medicaid funding and jobs bill yesterday that includes a provision that ensures that 340B providers will continue receiving drug discounts that the Affordable Care Act (ACA) had called into question. The House passed the bill on Aug. 10 and the Senate a week earlier.
The measure’s 340B-related section clarifies that non-retail sales of injectable, infusible, inhalable, instilled and implanted drugs will continue to be eligible for the discounts. Some drug industry officials had argued that a change to the definition of drugs’ average manufacturer price (AMP) included in the nation’s new health care reform law meant that injectable, infusible, inhalable, instilled and implanted drugs were no longer counted toward AMP. As a result, they said, the drugs were no longer subject to 340B discounts. AMP is used to calculate 340B discounts as well as manufacturer Medicaid rebates and federal upper limits on Medicaid pharmacy reimbursement for generic drugs.
Jim Donnelly, administrative risk officer at Fairview Pharmacy Services in Minnesota, notes that the specialized drugs in question “are distributed widely to outpatient hospitals and related clinics.”
“Savings on these drugs are a material improvement for 340B hospitals,” he says.
Exception to the Exclusion
When Congress passed ACA, it altered the definition of AMP to exclude certain payments and rebates received from, or provided to, entities other than retail community pharmacies. The bill it just sent to Obama creates an “exception to that exclusion” for injectable, infusible, inhalable, instilled and implanted drugs that are “generally” not dispensed through a retail community pharmacy.
Congress added the word “generally” to the exception language late in its deliberations and its implications are being debated.
For example, the National Community Pharmacists Association issued a press release saying the revised language “has the potential to be used to underpay (community) pharmacies and discourage generic prescription drug use.” The group says it will reach out to the Centers for Medicare and Medicaid Services (CMS) “to ensure that doesn’t happen.”
Other stakeholders think the word’s addition was simply designed to enable CMS to require manufacturers to calculate AMPs for drugs that typically are not sold to the retail class of trade.
Orphan Drugs and Inpatient Expansion
The bill that Obama signed failed to address two other lingering 340B issues that grew out of health care reform’s passage: the restoration of children’s hospitals’ ability to buy high-priced orphan drugs with the 340B discount and the proposed creation of a limited inpatient drug discount program called 340B-1. It is unclear if Congress will address these issues before November’s elections, if at all.
It is also unclear if it will pass an appropriations bill for the Department of Health and Human Services (HHS) or fund the Office of Pharmacy Affairs (OPA) and other health programs under a catch-all spending measure. Earlier this month the Senate Appropriations Committee approved a $5.2 million allocation for OPA for the fiscal year that begins Oct. 1, a $3 million increase. But if OPA’s budget is provided for under a continuing resolution, that figure would drop to this year’s $2.2 million level.