340B covered entities are breathing easier today upon learning that U.S. House Democrats excluded much-feared Medicaid managed care “spread pricing” language from forthcoming drug pricing legislation.
The House Energy & Commerce Committee late yesterday released the text of the 16 subtitles it is contributing to President Biden and congressional Democrats’ Build Back Better social infrastructure plan. Subtitle E addresses drug pricing and draws heavily from House Democrats’ drug pricing bill H.R. 3.
340B entities feared that the committee’s drug pricing section of the plan would keep language from H.R. 3 requiring Medicaid managed care organizations (MCOs) and/or their pharmacy benefit managers to limit payment for covered outpatient drugs, including 340B purchased drugs, to ingredient cost plus a dispensing fee. If such language ever became law, 340B entities would lose the ability to earn revenue by billing Medicaid MCOs at a mark up over 340B acquisition cost.
The E&C committee, however, left the spread-pricing language out of its drug pricing section. The committee is marking up its sections of the Build Back Better plan on Monday. 340B provider groups are reviewing the text of the House bill closely for other areas that could be perceived as undermining 340B’s effectiveness. For instance, there is some concern that allowing the government to negotiate discounts on Medicare drugs could eat into 340B savings. Nonetheless, these groups are in a bit of a bind since they don’t want to be seen as holding up a signature Democratic initiative.
If the bill passes the House, it is likely to be with a narrow margin. House Republicans have vowed to oppose the reconciliation bill and Democrats have few votes to spare. Covered entities aren’t totally out of the woods, however. The spread-pricing language could reappear when the Senate begins its consideration of the Build Back Better plan. Whether the Senate ultimately includes drug pricing legislation in the final reconciliation bill remains an open question.