Analysis: New bill to expand drug discount

WASHINGTON, June 7 (UPI) -- A bill introduced Thursday would expand a program that lowers drug prices for hospitals and clinics that serve the poor.

"This program is vital, needed and important," said Rep. Bobby Rush, D-Ill., sponsor of the 340B Drug Expansion Act of 2007.

The 340B program, established in 1992, allows about 12,000 hospitals and clinics that serve a high proportion of indigent patients to pay as much as 50 percent less for outpatient drugs by requiring drug companies participating in the Medicaid program to provide steep discounts.

But supporters of the bill, co-sponsored by Reps. Bart Stupak, D-Mich., and Jo Ann Emerson, R-Mo., say the program could do more to help safety net healthcare facilities.

The proposed legislation would allow eligible hospitals to save more money by extending discounts to inpatient drug prices. It would also extend eligibility for the program to thousands more rural hospitals, Medicare-dependent hospitals, children's healthcare providers and mental health and substance abuse centers.

Additional provisions would beef up oversight of the program to make sure hospitals are paying the right prices.

Supporters of the bill say it would save hospitals hundreds of millions of dollars, savings that would be passed on to taxpayers who foot the bill for uncompensated care through federal and state programs.

Pharmaceutical companies, however, say the program has already expanded far beyond its original intent to help a small number of hospitals providing the most care for indigent patients. Continued expansion of the program, they say, would amount to drug price controls and all the negative effects they entail.

"Hospitals and clinics and safety net providers and especially patients feel the benefits of this program each and every day," Rush told reporters at a news conference.

Stupak said rural hospitals, most of which are now ineligible for the program, need the relief the bill could provide.

It is "an issue of fairness and parity," he said.

Representatives of hospitals serving mainly low-income patients said they could serve them at lower cost if they saved more money.

That would help the financial situation of hospitals and save money for taxpayers, said William von Oehsen, president of Safety Net Hospitals for Pharmaceutical Access.

"Taxpayers should not be paying for the profits of drug companies," he said. With discounts, hospitals "use those savings to invest in their missions -- to expand access for indigent populations."

The Medicaid program alone would save $217 million annually, the sponsors estimate.

A study of 15 safety net hospitals in Florida found the changes in the bill would save them $93 million per year, said Larry Gage, president of the National Association of Public Hospitals.

Drug companies are still reviewing the legislation but have deep concerns about any expansion of the program, said Ken Johnson, senior vice president of Pharmaceutical Research and Manufacturers of America, the main drug company trade group.

The bill calls for expansions of a program that has already been extended to hundreds of new hospitals, he said. Wide-scale drug price controls are not the solution to the nation's healthcare woes, he said, but would hurt everyone by reducing innovation of new drugs.

"We should all work together to find ways to make sure Americans have access to the comprehensive healthcare they deserve," Johnson said. "Unfortunately, this bill would not achieve that goal."

Despite the opposition, the bill's sponsors said they were optimistic about the bill's prospects in Congress.

It is likely to gain support of the members of any committee where it is assigned and could be passed before the end of the year, Rush said.

"This bill will become a priority," he said. "It's just a good commonsense bill."