Facing opposition to extending the discount from the powerful drug industry lobby, House Democratic leaders announced that they will use the legislative process known as “budget reconciliation” to remove a provision that would expand a federal drug discount program to hospitals serving a large volume of low-income and uninsured patients. “At a time when many of our hospitals are struggling more than ever to provide pharmaceutical care to our most vulnerable patients, we are deeply disappointed with this decision,” said Ted Slafsky, Executive Director of Safety Net Hospitals for Pharmaceutical Access (SNHPA), an organization of 500 hospitals serving the poor. “We urge Congress to add this common-sense provision back into health reform.”

The Congressional Budget Office estimates that the measure would save the federal government more than $1 billion over the next decade. A study by the University of Minnesota found that the impact of the increased discounts to the drug industry would be negligible, affecting less than 1 percent of its domestic sales.

If the provision is added back into health care reform, more than 800 safety net hospitals nationwide will save an average of $2 million per year on prescription drugs, according to SNHPA. The current 340B law provides hospitals serving a disproportionate share of indigent patients discounts on outpatient pharmaceuticals. The measure would extend 340B discounts for drugs administered to patients who have been admitted to a safety net hospital.

On March 16, 40 members of the House of Representatives wrote to House Speaker Nancy Pelosi urging her to keep the Senate-passed 340B extension in the final health care reform legislation. Stand-alone legislation that would extend 340B drug discounts to the inpatient setting (H.R. 444), introduced by Reps. Bobby Rush (D-Ill.), Jo Anne Emerson (R-Mo.) and Bart Stupak (D-Mich.), currently has the support of 100 co-sponsors.

The 340B inpatient extension was included in health reform legislation approved by the House Energy and Commerce Committee in July 2009 and by the entire U.S. Senate in December 2009. President Obama included extending the 340B drug discount to the inpatient setting in his health reform bill released last month.