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New Bill Would Reduce Drug Costs for Hospitals Serving Low Income
Recently Introduced Senate Bill Would Create New Savings, Improve Oversight
Washington, D.C. – Safety Net Hospitals for Pharmaceutical Access, an organization of more than 400 hospitals that participate in the Public Health Service 340B drug discount program, expressed its strong support today for S. 1376, the “340B Program Improvement and Integrity Act of 2007.” The bill, introduced by Senators Jeff Bingaman (D-NM) and John Thune (R-SD), would extend discounts to inpatient drugs and provide much-needed financial relief to both safety net hospitals and the Medicaid program.
Enacted in 1992, the 340B program requires pharmaceutical manufacturers that choose to participate in Medicaid to sell outpatient drugs at discounted prices to taxpayer-supported health care facilities that have a mission to provide care to the uninsured and low-income populations. While the 340B program significantly reduces drug costs for outpatients, hospitals are forced to pay 20-25 percent more for the same pharmaceuticals when used for inpatients and are saddled with the regulatory burden of managing two inventories.
S. 1376 would make inpatient 340B discounts available to more than 700 disproportionate share hospitals (DSH) that participate in the program. These hospitals are either public institutions or private non-profits under contract with state or local government to provide large volumes of indigent care. The bill also adds critical access hospitals, sole community hospitals, and rural referral centers to the list of covered entities under the 340B program. Under the legislation, these rural hospitals would be subject to appropriate standards that reflect an obligation to provide indigent care, similar to standards that existing 340B entities must meet. The bill would also create new revenue for the Medicaid program by allowing Medicaid to access some of the savings generated by the reduced costs of prescriptions. SNHPA estimates that the bill would save Medicaid over $100 million a year. In addition, the bill contains numerous integrity provisions designed to improve 340B program oversight and administration.
“This bill would not only provide relief to hospital pharmacies that are struggling to provide pharmaceutical care to our most vulnerable patients, it would also significantly reduce costs to Medicaid at a time when Congress is faced with very difficult budget decisions,” said Ted Slafsky, SNHPA’s Executive Director. “We applaud Senators Bingaman and Thune for their leadership on this issue.”
“We are hopeful that we can get this legislation enacted during this session of Congress,” says SNHPA’s President William von Oehsen. “There is no reason why hospitals should be paying so much more for the same exact drugs just because a patient is too sick to go home,” von Oehsen says.
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Washington, DC 20005 
