June 22, 2010 – U.S. Senate leaders are weighing their options after failing to garner the 60 votes necessary to secure passage of a jobs and tax bill that would create a new discount program for drugs administered or dispensed to hospital inpatients lacking insurance.
Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, today released his third version of the bill in an attempt to gain the supermajority of votes needed for it to advance. It contains several changes to the inpatient drug discount program sought by hospital groups.
On June 18, the Senate unanimously approved a measure carved out of the bill, H.R. 4213, extending Medicare physician payments for six months. It is uncertain how the rest of the bill will fare without that politically urgent provision.
The full House passed H.R. 4213 in late May. In addition to creating the new 340B-1 inpatient drug discount program, the bill would also let children’s hospitals continue to buy outpatient “orphan” drugs at a discount.
Despite its name, 340B-1 would be separate from the existing 340B outpatient drug discount program and function more like a drug manufacturer’s patient assistance program.
Groups Seek Changes to Measure
On June 9, Safety Net Hospitals for Pharmaceutical Access (SNHPA), the National Alliance of State and Territorial AIDS Directors, the National Association of Children’s Hospitals, the National Association of Public Hospitals and Health Systems, and the Planned Parenthood Federation of America sent a letter to Senate leaders outlining their concerns with the proposed inpatient drug discount.
Most hospitals that participate in 340B would not be able to participate in 340B-1, the groups observed. Those that do would be burdened with the need to keep a separate 340B-1 drug inventory and required to abide by program integrity provisions much stricter than 340B’s. Hospitals also would have a hard time knowing whether the discount should apply without first knowing whether a patient has sufficient insurance coverage, as is often the case with emergency room admissions.
The latest version of H.R. 4213 contains the following changes requested by the hospital groups:
- It replaces terms such as “patient,” “drug” and “covered entity” that were drawn from the 340B statute with “inpatient,” “inpatient drug,” and “340B-1 covered entity,” respectively.
- It clarifies that enrollment in 340B-1 is not mandatory and that the program’s compliance requirements apply only to its enrollees.
SNHPA had also asked Senate leaders to reduce the minimum Medicare disproportionate share (DSH) adjustment percentage for 340B-1 eligibility from 20.2 percent to 11.75 percent, the same minimum threshold generally applicable under the 340B program. Nearly two-thirds of the nation’s hospitals deemed “essential community providers” under the Affordable Care Act, the recently enacted health care reform law, would be ineligible under the 20.2 percent standard. However, the latest version of the 340B-1 proposal keeps the minimum DSH adjustment percentage necessary for eligibility at 20.2 percent.
Waxman Appends his Remarks
In a related development, Rep. Henry Waxman (D-Calif.), the influential chairman of the House Energy and Commerce Committee, recently extended his May 28 remarks on H.R. 4213’s passage to clarify that “this legislation is not intended to change the operations of the 340B program.”
“Nothing in section 340B or 340B-1 requires that hospitals and other qualifying entities participate in both the 340B and 340B-1 program,” he said. “Participating entities may, at their discretion, participate in either, neither or both programs.”
Waxman also addressed a provision in H.R. 4213 that would prevent drug manufacturers from discriminating against 340B and 340B-1 providers when the companies’ drugs are in short supply. According to Waxman, “in cases where there may be a drug shortage, 340B and 340B-1 entities do not automatically go to the front of the line.”
“But the manufacturer cannot send them to the back of the line either,” he continued. “With regard to supply shortages and drug availability, manufacturers must treat 340B and 340B-1 entities the same way they treat all their other customers.”