April 11, 2013—The Obama administration is proposing once again to help finance the 340B drug discount program with a 0.1 percent fee (or a penny on every $10) on 340B drug purchases. The user fee was included in the President’s proposed budget for fiscal 2014 released yesterday.[ms-protect-content id=”2799″] The upcoming fiscal year begins Oct. 1.
Just last month, the Senate defeated an amendment to a government-wide fiscal 2013 spending bill that included language to establish a 340B user fee.
Other highlights of the President’s budget include:
- The administration intends to “clarify that individuals who have exhausted inpatient benefits under [Medicare] Part A or who have elected to enroll in a [Medicare] Part C plan should be included in the calculation of the Medicare fraction of hospitals’ Disproportionate Share Hospital (DSH) patient percentages.” Experts say this would have the effect of reducing some hospitals’ Medicare DSH adjustment percentages and, in so doing, disqualify them from the 340B program.
- The President proposes to prevent critical access hospitals (CAHs) that are within 10 miles of another hospital from maintaining their designation as a CAH. Currently, to be designated a CAH a hospital must be located either more than a 35-mile drive from the nearest hospital or CAH or a 15-mile drive in areas with mountainous terrain or only secondary roads. CAHs first gained eligibility for 340B discounts under the Affordable Care Act.
- The administration proposes to allow Medicare to benefit from the same rebates that Medicaid receives for brand name and generic drugs provided to beneficiaries who receive the Medicare Part D Drug Benefit low-income subsidy, beginning in 2014. Manufacturers would have to pay the difference between rebate levels they already provide Part D plans and the Medicaid rebate levels. Separately, the President proposes speeding up the closing of the Part D coverage gap, which is being paid for by the drug industry.
- The budget includes proposals to clarify how Medicaid average manufacturer price (AMP) is defined for brand-name drugs and to change the Medicaid drug rebate formula for new drug formulations. The 340B discount is AMP reduced by a minimum rebate percentage of 23.1 percent for most brand name prescription drugs, 17.1 percent for brand name pediatric drugs and clotting factor, and 13 percent for generic and over-the-counter drugs.
- The President proposes to begin Medicaid DSH payment reductions to safety-net hospitals in fiscal 2015 instead of fiscal 2014 as currently scheduled.
The administration proposes $4.47 million in appropriated funds for the Office of Pharmacy Affairs in the coming fiscal year, roughly equal to what it is getting under the continuing resolution that is funding most of the government for the remainder of fiscal 2013.
The president would supplement the appropriation with an additional $6 million from a 0.1 percent fee on 340B drug purchases. In the past, the administration proposed that the fee would be collected by manufacturers at time of sale. In this year’s proposal, the fees would be collected by the Secretary of Health and Human Services (HHS) based on sales data submitted by manufacturers.
HRSA would receive $9.04 billion under the President’s proposal, up from $8.54 billion in fiscal 2013.[/ms-protect-content]