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Senate Appropriators Again Pitch Fee for Discount Drug Program

By Kerry Young, CQ Roll Call

June 14, 2016 -- Senate appropriators have renewed their bid to create a small fee for the so-called 340B drug discount program, in keeping with President Obama's budget request. House appropriators have been less enthusiastic about this proposal in the past and a hospital lobbying group opposes it.

The draft fiscal 2017 Labor-Health and Human Services-Education Appropriations bill (S 3040) calls for creating a fee of 0.1 percent on purchases made through the discount drug program. The Senate Appropriations Committee on June 9 approved the draft bipartisan bill.

The 340B program stems from a workaround in 1992 to preserve a path for low-cost pharmaceutical donations that wouldn't interfere with Medicaid drug rebates. Its name refers to the section of the public law under which it was created.

The 2010 health law opened up the eligibility rules for the 340B program. About 2,140 hospital organizations participated in 2014, up from 583 in 2010, according to the Medicare Payment Advisory Commission.

The Obama administration has requested the creation of a fee for 340B program in several annual budget proposals, seeking funds to offset the costs of running the recently expanded program.

This proposed fee appeared in past Senate appropriations draft measures, including Blunt's fiscal 2016 draft, but was dropped in subsequent negotiations. The House Appropriations Committee has not yet announced a date for a markup of its version of the Labor-HHS-Education bill. Rep. Mike Simpson of Idaho, the No. 2 Republican on the Labor-HHS Appropriations panel, last week told CQ HealthBeat that he was confident that the subcommittee would mark up its own fiscal 2017 measure.

Under the 340B program, certain nonprofit hospitals and clinics can purchase steeply discounted medicines, and then are expected to apply these savings toward expanding services for their customers. A new fee would reduce the funds available for these services, according to the American Hospital Association, which urged Congress to drop it.

"Imposing a user fee on entities eligible for the 340B program would lessen the benefit these safety-net providers receive from the program," said Aimee Kuhlman, senior associate director for federal relations at the AHA.

Separately, federal officials are moving slowly on a proposed set of rules for the 340B program, which lobbyists call "the mega guidance." A timeline posted by the White House's budget office indicates that the final version of this proposal is due to be released in December. If that timeline slips, this work could be left for the next presidential administration to address. A main point of contention over this draft proposal is how the 340B discount can be applied to prescriptions taken after patients leave the hospital.

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