October 1, 2010—Children’s hospitals received some good news earlier this week in their fight to restore their 340B discounts on orphan drugs.
Seven Republican U.S. senators introduced legislation on Sept. 28 to lift the ban on the hospitals’ purchase of approximately 350 high-priced products used for oncology and other complicated disease states at 340B discounted prices. Its language is virtually identical to that included in a “tax extenders” bill that Senate Finance Committee Chairman Max Baucus (D-Mont.) tried but failed to get enacted in mid-September and that the House has approved twice.
“I am pleased to introduce this legislation that protects the lives of the most vulnerable among us by ensuring children’s hospitals across the country can purchase life-saving medicine at a discounted rate,” said Sen. Scott Brown (R-Mass.), the new bill’s lead sponsor, in a statement. “This bill will save children’s lives, and is the right thing to do.”
Brown pledged “to work across party lines and with all of our colleagues to reach agreement and find resolution on this.”
Orphan drugs treat rare diseases that affect fewer than 200,000 people, but children’s hospitals regularly use them for children with rare medical conditions. They also use these products for other health indications.
The new health care reform law prohibited free-standing cancer hospitals, critical access hospitals, rural referral centers and sole community hospitals from buying orphan drugs with the 340B discount. All four types are new to 340B. But the law also barred children’s hospitals from buying orphan drugs with the discount even though they were already enrolled in 340B. As the Monitor recently reported, drug companies have started notifying these hospitals that they will no longer provide them with 340B pricing on the drugs. Rural hospitals are receiving similar letters and also raising concerns about the prohibition.
In mid-July, the chairmen of the House and Senate committees with jurisdiction over 340B sent a letter to Secretary of Health and Human Services (HHS) Kathleen Sebelius saying that Congress intends to lift the ban for children’s hospitals and asked her to delay its implementation.
Limited Inpatient Discount
The ill-fated tax extenders bill that Chairman Baucus tried to get approved also would have created a limited inpatient drug discount called 340B-1.
The original health reform bill signed by President Obama extended 340B discounts to the inpatient setting, but Congress repealed the extension a week later when it used a procedure called reconciliation to revise the bill.
Like its House-approved counterpart, the tax bill that stalled in the Senate included a modified version of the extension that would limit inpatient discounts to uninsured patients. Eligibility would be restricted to safety-net hospitals, children’s hospitals and free-standing cancer hospitals with a Medicare disproportionate share (DSH) adjustment above 20.2 percent and to sole community hospitals and rural referral centers with an 8 percent adjustment. All critical access hospitals would be eligible as well.