Bill would allow 340B discounts for inpatients

June 18, 2007

In proposed legislation that could save millions of taxpayer dollars in drug costs, the U.S. Senate is considering extending current 340B program discounts to include inpatients.

In proposed legislation that could save millions of taxpayer dollars in drug costs, Congress is considering extending current 340B program discounts to include inpatients. "We've been working on this for years," said James Jorgenson, R.Ph., M.S., administrative director for pharmacy services at the University of Utah Hospitals & Clinics in Salt Lake City. "I think this is as close as we've ever gotten."

"That means that the same drugs given to indigent inpatients cost a facility about 25% more," said Ted Slafsky, executive director of the DSH lobbying organization Safety Net Hospitals for Pharmaceutical Access (SNHPA), which helped design the proposed law. Titled the 340B Program Improvement & Integrity Act of 2007 in both the House (H.R. 2626) and Senate (S. 1376), it has bipartisan sponsors and is currently in committee in both chambers.

The bill also adds critical access hospitals, sole community hospitals, and rural referral centers to the list of covered entities. "That is a significant part of the legislation," said Diana Bond, R.Ph., director of pharmacy services at the University Medical Center of Southern Nevada (UMCSN) in Las Vegas. "Many rural hospitals, which are sometimes the only health resources for a hundred miles or more, are struggling for viability. This law, if passed, could offer some financial relief."

UMCSN is an urban hospital, and suffers from the resource crunch felt by any facility relying on taxpayer dollars to cover a lot of uninsured patients. "We serve all comers, anyone who needs help, regardless of ability to pay, including large numbers of working poor," Bond said. "And we are experiencing a huge influx of undocumented workers in our region. If we could lower our drug costs, that savings could be used to enhance several other programs."

In addition to savings realized by the DSHs, S. 1376 states that the savings could go to Medicaid. "We estimate that if this law passed, Medicaid could save $100 million a year or more, at a time when lawmakers are talking a lot about lowering [entitlement] costs," said Slafsky. The bill also has several integrity provisions designed to improve 340B program oversight and administration, he said. For example, the secretary of Health & Human Services would be directed to ensure compliance by both manufacturers and DSHs with 340B rules and standards, and would be directed to establish a dispute-resolution process addressing overcharges.

"These oversight elements are not as strongly stated in [current] 340B regulations," said Slafsky.

According to SNHPA, two other key features of S. 1376 would improve 340B: It would allow the use of several contracted pharmacies by the DSHs and would direct the HHS secretary to establish procedures ensuring administrative coordination between CMS and the Health Resources & Services Administration on 340B program oversight. If passed this year, the law's provisions would be implemented on Jan. 1, 2008.