Senate Bill Would Save Safety Net Hospitals Billions in Inpatient Pharmacy Costs

"It would enable us to cover our costs as we serve an increasing number of patients who are unable to afford their healthcare because of low income." Lowe says. "More than half of my patients are not eligible for Medicaid."

Additionally, he says, allowing expansion to inpatient drugs would "decrease some of the administrative burden we face in keeping inpatient and outpatient purchases separate. We now have two separate pharmacies."

Jim Kaufman, public policy vice president for the National Association of Children's Hospitals, says his group's members "are ecstatic" that their members are now able to participate, but says the Senate bill would solidify and streamline the process.

The National Association of Public Hospitals and Health Systems also wants the 340B expansion. "340B hospitals must pay significantly more for inpatient pharmaceuticals, amounting to an average of $1.7 million per hospital in additional costs each year," the association wrote on its Web site.

"These hospitals must also devote significant time and resources managing two drug inventories to prevent 340B drugs from being used in an inpatient setting," according to the National Association of Public Hospitals and Health Systems.

A provision in the 2003 Medicare Modernization Act allows manufacturers to offer discounted pricing on inpatient drugs as well, on a voluntary basis. But the association reported that a "survey of 340B hospitals indicated that inpatient discounts, post MMA, were received on only 12% of the most commonly used brand name drugs."

According to the National Association of Public Hospitals and Health Systems, the federal government could benefit too, depending on how the bill is ultimately worded. "Language passed by the House Energy and Commerce Committee and Senate HELP Committee would require hospitals to credit Medicaid a portion of their 340B savings on inpatient drugs administered to Medicaid patients.

"Thus, in addition to lowering inpatient drug costs for safety net hospitals, the bill would generate more than $1.2 billion in savings over 10 years for the Medicaid program," according to the Congressional Budget Office.