About 800 safety net hospitals are fighting to save a proposed expansion of a Medicaid drug discount program that has been trimmed from the House’s reconciled healthcare reform bill. The measure if included could save hospitals an estimated $1 billion annually.
Drug discount out
House measure could save $1 billion if put back in
The legislation—originally included in healthcare reform bills coming out of the House Energy and Commerce and Senate Health, Education, Labor and Pension committees—proposed expanding the 17-year-old 340B drug discount program to include drugs used to treat inpatients. The measure also would make children’s and small rural hospitals eligible to purchase drugs under the program. But while the eligibility expansion has survived, House lawmakers have stripped the inpatient extension from the adjusted version of their healthcare reform bill, drawing the rancor of the measure’s supporters.
“It just doesn’t make sense that hospitals have to pay more for their inpatient drugs than their outpatient drugs,” said Rob Recklaus, director of government affairs for the advocacy group Safety Net Hospitals for Pharmaceutical Access. “Also, it creates an administrative burden because they have to purchase under separate contracts and maintain separate inventories.”
In its current form, 340B allows hospitals with disproportionate shares of low-income and uninsured patients to purchase all of their outpatient drugs through the same manufacturers’ rebate program used by Medicaid. Under the program, safety net hospitals save an average of 24% to 27% more on drug purchases than they could through group purchasing organization pricing, according to a 2004 survey from Mathematica Policy Research.
Participating hospitals are required to share a portion of those rebates with Medicaid. As a result, the inpatient provision would not only provide 340B-eligible hospitals an additional $1 billion in savings annually, it would also provide Medicaid an added $1.7 billion in savings over 10 years, according to the Congressional Budget Office.
“This provision would have saved New York City Health and Hospital Corp. more than $11 million a year,” said Alan Aviles, president of the publicly owned hospital system in an e-mail.
Supporters say that drugmaker pushback has caused lawmakers to scuttle the measure from the House bill. They believe legislators felt pressured by drugmakers, who are trying to cap their financial support of healthcare reform at the $80 billion figure negotiated earlier this year with the Obama administration. “I think it’s fair to say that the pharmaceutical companies have never been very enthusiastic about this program,” said Richard Pollack, executive vice president of advocacy and public policy for the American Hospital Association, which supports the measure.
A spokeswoman for the Pharmaceutical Research and Manufacturers of America declined to comment.
Send us a letter
Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.