Lawmakers battle Trump, PhRMA on discount drug rule

Lawmakers in both parties are seeking to block the Trump administration’s changes to a Medicare drug discount program, arguing it would have a negative impact on hospitals that serve low-income people. 

A rule from the Centers for Medicare and Medicaid Services (CMS) slated to go into effect on Jan. 1 would result in $1.6 billion in cuts to “safety net” hospitals that serve a significant number of low-income patients under the so-called 340B drug discount program. 

The changes backed by large pharmaceutical companies have drawn the ire of hundreds of lawmakers on Capitol Hill, prompted lawsuits from major hospital groups and inspired expensive ad campaigns. 

{mosads}Now the lawmakers are seeking to block the change in a must-pass spending bill, possibly with a one-year moratorium on instituting the rule.

“As talks continue on end of the year packages, we urge you to work with us to prevent these cuts,” Sen. John Thune (S.D.), the Senate’s No. 3 Republican, and five other senators wrote in a letter to Majority Leader Mitch McConnell (R-Ky.) and Minority Leader Charles Schumer (D-N.Y.) 

Lobbyists are pushing hard for at least the one-year moratorium on the rule and feel cautiously optimistic they’ll be successful.

Lobbyists for both drug companies and hospitals have come out in full force over the issue, with more than $50 million spent on lobbying from July 1 through Sept. 30 in support of and against the change, according to federal filings. For example, the Pharmaceutical Research and Manufacturers of America (PhRMA) spent $5.6 million on lobbying during that time period, while the American Hospital Association, one of the groups suing over the rule, spent $4.5 million. 

“A lot could happen in end-of-year negotiations, but we know at least a temporary moratorium is in the mix of discussions for a year-end package,” said an industry source. 

“I remain cautiously optimistic that it’ll get done.” 

A bill sponsored by Reps. David McKinley (R-W.Va.) and Mike Thompson (D-Calif.) would permanently block the rule. It has over 135 co-sponsors as of Tuesday afternoon, including 40 Republicans. 

A spokesperson for McKinley acknowledged that many options are being discussed to block the rule, including adding language to the spending deal to block it for one year. 

A group of 228 House members also signed a September letter urging CMS to withdraw the rule. In the Senate, 57 lawmakers signed onto a similar letter in October, including 17 Republicans. 

Lawmakers from rural states have been especially concerned about the rule, which could hurt struggling hospitals in their communities.

“I think with this kind of support from members on both sides of the aisle, and both sides of the Capitol, it’s looking more and more promising everyday,” said Peggy Tighe, a lobbyist who represents hospitals that participate in the 340B program because they serve a large amount of low-income patients.

“It’s going to be in the leadership’s hands, and I know both sides of the equation are actively talking to leadership with their various points of view. Clearly you know from my side of the camp, we want a moratorium on the rule,” Tighe said. 

Under the 340B program, drug companies give steep discounts to hospitals that serve large numbers of low-income patients. Medicare then reimburses hospitals for the drugs at a higher rate, and the hospitals get to keep the extra money to spend on other services to help low-income patients. 

Drug companies and other opponents argue the program has grown out of control over the years and question how much of the money actually goes to benefit low-income patients. 

A 2015 report from the Government Accountability Office concluded that about 40 percent of the hospitals in the U.S. participate in the program.

PhRMA, the largest drug-lobbying group in the U.S., argues the rule will fix “one of the many perverse incentives created by the 340B program that had previously let hospitals increase their profits at the expense of Medicare and its beneficiaries.” 

The rule change means Medicare would reimburse hospitals in the program at a much lower rate, amounting to a loss of $1.6 billion in one year.

It would redistribute that funding among all hospitals, including for-profit ones.

The new rule comes amidst an ongoing investigation the House Energy and Commerce Committee has launched examining the growth of the program. 

That the Department of Health and Human Services (HHS) would impose a new rule on the program as Congress considers potential changes to it has irritated some members and their staffs, an industry lobbyist said, and could contribute to the high support among lawmakers for blocking it. 

“Most people are very angry about the process — that HHS is coming in with a flamethrower to tackle what they think is the problem with 340B while simultaneously the [Energy and Commerce] committee’s oversight and investigations subcommittee has been exploring what’s right and what’s wrong with the 340B program,” the lobbyist said. 

The Trump administration has feverishly defended the rule change despite pushback from stakeholders, lawmakers and its own 340B advisory panel. 

CMS Administrator Seema Verma argues the rule would lower the cost of certain drugs for Medicare patients, saving an estimated $320 million a year on copayments. 

But opponents disagree with that characterization, arguing it wouldn’t have much of an impact on copayments and that the rule would lead to increases in health-care costs for other services.

The American Hospital Association, America’s Essential Hospitals and the Association of American Medical Colleges have sued the administration over the cuts, arguing it violates the Social Security Act. They’re asking for an injunction on the rule, with the next hearing scheduled Dec. 21. A decision could come before the rule takes effect on Jan. 1. 

“This is a straight-up undeserved penalty to safety net hospitals that we think should not occur,” said Karen Fisher, chief public policy officer for the AAMC. 

“Whatever people’s opinions are on the 340B program, a Medicare cut hurts access and services to patients provided by these important institutions.”