May 28, 2010 – The U.S. House passed legislation today that would create a new, voluntary drug discount program entirely separate from the current 340B program and governed by its own rules and guidelines. The American Jobs and Closing Tax Loopholes Act of 2010 (H.R. 4213) would also enable children’s hospitals to continue to buy “orphan” drugs at a discount.
The new inpatient program, called 340B-1, would extend discounts to drugs administered to patients without insurance or for which a hospital receives no compensation. It would not, however, enable institutions to access 340B inpatient pricing for Medicaid, Medicare or insured patients.
340B hospitals’ participation in the new program would be restricted to those with a Medicare disproportionate share (DSH) adjustment above 20.2 percent. Critical access hospitals enrolled in 340B would be eligible to participate without regard to their DSH percentage and sole community hospitals and rural referral centers would be eligible with an 8 percent DSH adjustment. The Health Resources and Services Administration (HRSA) would have to implement the program by January 1, 2011. House Democratic leaders insisted that 340B-1 be implemented and administered separately from the existing 340B drug discount program.
Hospital enrollment in 340B-1 would be voluntary. Unlike the existing 340B program that allows hospitals to buy their inpatient drugs through their group purchasing organization (GPO), the new program would not allow hospitals to use their GPO for 340B-priced inpatient drugs. Hospitals presumably could continue to use their GPO for voluntary 340B inpatient pricing that some manufacturers offer. Hospitals would also be permitted to use their GPOs to buy non-340B-1 inpatient drugs.
Hospital groups have concerns with 340B-1’s requirement that qualifying hospitals track their use of inpatient drugs for uninsured and underinsured patients, which could create administrative challenges for both hospitals and HRSA. The groups also fear that 340B-1 will pose too significant an administrative burden to justify a hospital’s enrollment.
The Senate is expected to take up H.R. 4213 during the week of June 7, following Congress’ week-long Memorial Day recess.