Anticipated Bill Would Pause 340B Discounts on Some Shortage Drugs

by admin | November 18, 2011 8:10 pm

November 18, 2011—U.S. Sen. Orrin Hatch (R-Utah), the ranking Republican on the Senate Finance Committee and a senior member of the Health, Education, Labor and Pensions (HELP) Committee, reportedly is drafting legislation that would exclude “medically necessary” drugs that are in short supply from 340B discounts and Medicaid rebates for possibly up to three years, the Monitor has learned.

[ms-protect-content id=”2799″]The electronic newsletter Inside Health Policy wrote about the draft legislation this week and sources confirm that a bill is being prepared. The measure reportedly is expected to be introduced after Congress’ Thanksgiving recess. In addition to the moratorium on 340B discounts and Medicaid rebates, Inside Health Policy saidthe bill also would base Medicare Part B reimbursement for affected drugs on wholesale acquisition cost (WAC) instead of average sales price (ASP). In 2005, Congress switched the basis of Part B drug reimbursement from average wholesale price (AWP) to ASP.

News of Senator Hatch’s proposed bill came about a week after four other senators called for a hearing[1] on possible legislative solutions to the growing problem of drug shortages and about two weeks after President Obama’s executive order on the subject. Those senators are sponsors of legislation (S. 296) that would require drug companies to notify the Food and Drug Administration (FDA) in advance of shortages or face civil monetary penalties.  The President’s executive order partially addresses some of their bill’s goals. A similar measure (H.R. 2245) is also pending in the House.

Some drug industry analysts say that those bills and the President’s order ignore economic forces behind shortages, which mainly affect generic injectable drugs. For example, industry consultant Adam Fein notes in his blog Drug Channels that “low reimbursement for mature generic injectable drugs reduces the incentive for a manufacturer to enter the market.” The introduction of the ASP methodology in 2005, he says, is “one likely cause.”

Health care professionals who track drug shortages say they see no evidence that the 340B program is contributing[2] to the current crisis. In light of that conclusion, hospitals that participate in 340B say that addressing shortages by stopping 340B discounts would solve nothing, increase costs, and actually exacerbate the problem.[/ms-protect-content]

Source URL: https://340bemployed.org/anticipated-bill-would-pause-340b-discounts-on-some-shortage-drugs/

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