Huge COVID Relief Bill That Would Lift Medicaid Rebate Caps Moves to Senate

The U.S. House on Saturday passed a $1.9 trillion COVID-19 relief bill with language that might lead to 340B ceiling prices on some branded drugs being set lower than the drugs’ average manufacturer price (AMP).

The bill, H.R. 1319, was approved 219-212, with all Republicans and two Democrats opposed. “Now the bill moves to the United States Senate where I hope it will receive quick action,” President Biden said Sunday. “We have no time to waste.”

The bill includes a section that would lift the limit on rebates that makers of brand-name drugs  pay to Medicaid, now capped at 100 percent of a drug’s AMP. A brand-name drug’s 340B ceiling price is the lower of best price available from the manufacturer, or AMP minus 23.1 percent, adjusted by the Consumer Price Index-Urban (CPI-U) based on launch date and current quarter AMP.

Under a federal 340B program regulation since 2019, written guidance since 2011, and informally before that, when a 340B ceiling price would otherwise be below zero (due to a drug having a history of price increases higher that the inflation rate), the 340B ceiling price has been set at $0.01.

The Medicaid rebate language in H.R. 1319 is silent on its implications for 340B ceiling prices. If the language becomes law, some stakeholders expect the 340B program “penny pricing” policy would stay in place, saving manufacturers from having to pay 340B ceiling prices below AMP. Others think 340B covered entities might argue that the penny pricing policy is unenforceable because it is based on a law that has changed.

News organizations report that U.S. Senate Democrats are drafting a substitute for H.R. 1319 more amenable to the party’s centrist wing. The draft reportedly retains the House bill’s Medicaid rebate language.