Skip to main content

Could This Bipartisan Bill Protect 340B Drug Discounts? The Clock Is Ticking

News  |  By Jack O'Brien  
   December 18, 2017

Support exists to prevent cuts, but questions remain on how lawmakers plan to achieve that goal.  

A drug discount program on the White House’s chopping block is receiving renewed bipartisan support on Capitol Hill as lobbyists spar over its future.

A final rule issued last month will reduce payments by 28.5% to the 340B Drug Price Program, which has provided Medicare payments for outpatient drugs to hospitals serving high volumes of low-income patients since it was instituted in 1992. The CMS rule, set to take effect on New Year’s Day, would result in an estimated $1.6 billion in cuts.

CMS Administrator Seema Verma said the move was in line with President Donald Trump’s efforts to reduce high prescription drug costs. Verma estimated Medicare beneficiaries would save $320 million because of the decision.  

Despite assurances from CMS, the declaration has drawn criticism from stakeholders and lawmakers who see the move as a financial detriment to consumers and rural health systems.

H.R. 4392 is a bill aiming to block the proposed change and preserve the current payment structure. The legislation has bipartisan support, with over 135 cosponsors in the House and numerous calls for a companion measure in the Senate.

Hospitals vs. Pharma

The debate over 340B has not only pitted Congress against the White House, but also hospitals against pharmaceutical manufacturers.

Tom Nickels, executive vice president of government relations and public policy for the American Hospital Association (AHA), wrote a blog on Wednesday in favor of preserving 340B. The program “constitutes less than 2.8 percent of the $457 billion in annual U.S. drug purchases” while achieving savings at “no cost to the government,” Nickels wrote.

340B Health, a group representing hospitals and health systems, issued an open letter  Wednesday to House Speaker Paul Ryan (R-Wisc.), Senate Majority Leader Mitch McConnell (R-Ky.), House Minority Leader Nancy Pelosi (D-Calif.) and Senate Minority Leader Chuck Schumer (D-N.Y.)

In the letter, 340B Health said the proposed payment reduction would cause a “tremendous disruption and loss of services” for low-income Americans.

Pharmaceutical companies, however, argue 340B has been abused in the years since its expansion under the Affordable Care Act and is due for a rules revision. Additionally, pharmaceutical manufacturers argue that drug prices will decline if the proposed change takes effect due to increased competition between companies.

How will Congress get it done?

While widespread support for H.R. 4392 exists on Capitol Hill, questions remain about which route Congress will take to protect 340B. Such an effort would have to take place in short order due to its nearing enactment date as well as several other pressing legislative matters.

In addition to the latest developments with the tax-reform bill, which includes several provisions that could affect the healthcare industry, Congress must act on another continuing resolution before a potential government shutdown on Dec. 22.

An additional difficulty to passing the legislation prior to the enactment of the rule on January 1 is the suggestion of a Republican Congress moving against a policy order from a Republican president.



Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

Get the latest on healthcare leadership in your inbox.