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Policy Issues: Federal 340B Legislation & Issues

340B Program Improvement and Integrity Act of 2007

On May 14, 2007, the “340B Program Improvement and Integrity Act of 2007” was introduced as S. 1376 in the U.S. Senate by Sen. Bingaman (D-NM) and Sen. Thune (R-SD).  S. 1376 would allow participating DSH to purchase drugs for their inpatient populations under the 340B Program and would remove the GPO exclusion that applies to outpatient drug purchases from applying to these inpatient procurements.  It would also add critical access hospitals, sole community hospitals, rural referral centers and children’s hospitals to the list of covered entities.  In addition, the bill would establish a complicated mechanism for state Medicaid programs to access some of the 340B savings from inpatient drug purchases.  The bill also includes a number of “integrity provisions” aimed at dispute resolution processes and mechanisms for entities to be refunded overcharged amounts.  A companion bill (H.R. 2606) was introduced in the House in early June.  Both bills will be referred to their respective Committees for consideration. 

Senate and House Support for Importation Growing

  Although activity around prescription drug importation diminished immediately after the creation of the new Medicare prescription drug benefit; recent events signal that importation is again a hot topic on Congress' agenda. On July 11 th , the Senate voted to amend the 2007 Homeland Security Appropriations bill (H.R. 5441) to prohibit the U.S. Customs and Border Protection from preventing any individual from importing an FDA-approved prescription drug from Canada . While limiting importation to FDA-approved drug products may appear safe, in reality rarely are drugs outside of the U.S. , including Canada , FDA-approved.

  This Senate action follows the adoption of similar legislation by the House in two separate House appropriations bills. The 2007 Agriculture Appropriations Bill (HR 5384) would prevent the FDA from using funds to prevent importation; and the House version of the 2007 Homeland Security Appropriations bill (H.R. 5441) includes a Customs prohibition similar to that passed by the Senate. In past years, language prohibiting the FDA from using its funds to prevent importation has been added to the Agriculture bill in one chamber and dropped in the conference committee process. But with the Customs language included in both the House and Senate versions of the Homeland Security appropriations legislation, there is a much greater chance of the provisions making it through the conference committee process and to the President's desk for him to sign into law.

 

Congressional Defense Bills Compromise Patient Choice of Pharmacist

  The House and Senate have passed their versions of legislation to authorize Fiscal Year 2007 appropriations for the Department of Defense (DOD). Because the two proposals differ, a conference committee has been appointed to negotiate the differences between the two bills. The conference committee report will go back to the House and Senate for a final vote before it is sent to the President for his signature. Both proposals include several items critical to pharmacists and require action.

  The Senate bill contains both good and bad provisions.

•  A good provision: Section 721 of the Senate bill (S. 2766) clarifies that the DOD may negotiate discounted federal pricing for prescriptions dispensed to TRICARE (the military's health care program) beneficiaries at pharmacies in the DOD's community pharmacy network. The DOD negotiates lower prices for medications dispensed at military treatment facilities (MTFs) and through the DOD's mail-service program.

•  A bad provision: Section 702 of the Senate bill requires all TRICARE beneficiaries to obtain refills of maintenance medications through their mail-service program and waives co-payments for certain medications that are obtained through the mail-service program. These provisions would prohibit patients from using their pharmacist and pharmacy of choice for maintenance medications and create coercive financial incentives to use one pharmacy provider over another.

  The House bill contains a ‘bad' provision: Section 731 of the House bill (H.R. 5122) increases co-payments for prescriptions obtained through the community pharmacy network but waives co-payments for prescriptions obtained through the mail-service program. This provision would create coercive financial incentives to use one pharmacy over another, compromising the patient's freedom of choice.

  One of the reasons the DOD is seeking this change is that the DOD currently receives rebates from manufacturers for prescription medications dispensed at MTFs and through the mail-service program. Not providing these same rebates for prescription drugs dispensed at pharmacies in the DOD's retail pharmacy network creates an economic disincentive to have patients obtain their pharmacy services through these community pharmacies.

  DOD believes existing law gives it the authority to negotiate with manufacturers for discounts for drugs dispensed at pharmacies in their retail network. However, most prescription drug manufacturers disagree and have filed a lawsuit against the DOD. Currently, the TRICARE retail pharmacy program is the only federal government program that does not receive rebates from manufacturers. Retaining Section 721 of the Senate bill, which clarifies that discounts may be negotiated for prescriptions dispensed through the DOD's retail pharmacy network, will remove the need to force or coerce patients to receive their pharmacy services through the DOD's mail-service program.

Update on Federal 340B Legislation

The June/August Policy Update contained a thorough analysis and discussion of legislation pending in Congress ( S. 4 and HR 3547 ) that would make several changes to the 340B program. There has been no progress on those particular bills at this time. S. 4 , a comprehensive healthcare bill introduced by Senate Majority Leader Bill Frist (R-TN) contains provisions that would impact 340B. Under the legislation, Disproportionate Share Hospitals (DSHs) would be allowed to purchase covered outpatient drugs through a group purchasing organization (GPO). Additionally, S. 4 would permit a covered entity to use multiple contract pharmacies. HR 3547 would extend 340B pricing to DSH inpatients, and would allow Critical Access Hospitals (CAHs) to use 340B pricing. However, the Congressional schedule has been filled with Medicaid reform, relief for hurricane victims, United States Supreme Court nominations, and the consideration of the budget bills for Fiscal Year 2006. Consequently, there has bee no movement on either of these bills.

    However, on October 6, Senators John Thune (R-SD) and Jeff Bingaman (D-NM) introduced S. 1840 a companion bill to HR 3547. S. 1840 would also permit the extension of the 340B program to include inpatient drug purchases of DSH hospitals and would include CAHs as “covered entities” under the law. The bill was referred to the Committee on Finance, which has also jurisdiction over Medicaid and Medicare . There was some hope that the provisions 340B extensions would be incorporated into the Senate's Medicaid reform package, but that has not happened.

 

Office of Inspector General Releases Two 340B-related Reports; Withdraws One

Two recent reports from the Department of Health and Human Services Office of Inspector General (OIG) focused on the administration of the 340B Drug Discount Program and prices paid by covered entities for drugs.

 

"Appropriateness of 340B Drug Prices" (OEI-05-02-00070) June 2004

On October 21, the Office of Inspector General withdrew report OEI-05-02-00070 entitled "Appropriateness of 340B Drug Prices," dated June 2004.  The OIG withdrew the report because of problems with the underlying data used in developing the report's findings.  The OIG has issued a memorandum to the Administrators of the Centers for Medicare & Medicaid Services and Health Resources and Services Administration announcing the withdrawal of the report and OIG plans for additional work related to the 340B program.  To view the memorandum, please click here.

 

“Deficiencies in the 340B Drug Discount Program's Database”

Focuses on the integrity of the Office of Pharmacy Affairs 340B participant  database and points out several areas for improvement. These areas include: incorrect participation information in the database, incorrect address information for covered entities and missing information on billing and shipping. OIG recommended that HRSA conduct a revalidation of information currently residing in the database, issue annual recertification for covered entities, develop a separate listing of newly added or deleted entities, develop a standard reporting format for entity addresses and add an additional field to designate entities with contracted pharmacy management. The OIG also encouraged HRSA to “optimize its Pharmacy Services Support Center contract as a means to move toward complete action.” To access this report, please click here.


340B Program Revision and Expansion Act of 2004
H.R. 4161 was introduced on April 2 and referred to the House Committee on Energy and Commerce. The bill is titled the "340B Program Revision and Expansion Act of 2004." Rep. Bobby Rush of Illinois sponsored the bill.  The bill expands the definition of "covered entity," extends 340B pricing to inpatient drugs, eliminates the group purchasing prohibition for certain hospitals, and permits the use of multiple contract pharmacies.

 
 
 
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