Rep. Peter Welch (D-VT) today introduced bipartisan legislation with Rep. Morgan Griffith (R-VA) that would address a loophole in the Medicare 340B Drug Pricing Program that is contributing to the rising cost of health care for consumers and threatening access to lifesaving medications. The introduction of this legislation is the latest in Welch's efforts to fix the broken prescription drug market that has led to unrestrained price increases for consumers and providers.
The full text of the Closing Loopholes for Orphan Drugs Act can be found HERE.
"Drug companies have been taking advantage of the "orphan drug' loophole since 2014 at the expense of consumers and rural hospitals and healthcare providers," Rep. Welch said. "Vermont hospitals rely on the 340B program to ensure they are able to continue to serve those with health care needs. These hospitals and those they serve cannot afford to have this critical program circumvented due to yet another market failure that allows big drug corporations to cash in at their expense."
"Congressman Welch and I have clarified the scope and intent of the designation for which drugs are excluded from the 340B Program pricing, which will enable hospitals and rural health centers to provide the best possible care options for our country's most vulnerable patients," Rep. Griffith said. "This clarification will close the orphan drug loophole, currently allowing drug companies to charge healthcare facilities in Southwest Virginia and other rural and underprivileged areas a higher price than intended by the program as designed by Congress."
The 340B Drug Pricing Program requires drug manufacturers to provide outpatient drugs to eligible health care organizations at significantly reduced prices. This includes Federally Qualified Health Centers, Critical Access Hospitals, Ryan White HIV/AIDS Program grantees, and certain types of hospitals and specialized clinics with a high proportion of Medicare and Medicaid patients. Vermont has 14 number of hospitals that participate in the 340B program. Current law excludes so called "orphan drugs," which are designated by the Department of Health and Human Services and treat rare diseases, from this program. In 2013, the Health Resources and Services Administration (HRSA) implemented rulemaking, which limited this exclusion only to instances of these drugs being used for their orphan indication. However, in 2014, the pharmaceutical industry sued. Ultimately, a federal district court struck down the finalized rule, claiming that HRSA lacked the authority to issue rulemaking in this matter.
"The 340b program contains or reduces drug costs to the hospital and supports our ability to provide care and resources to underinsured and uninsured patients across the state. Many so-called orphan drugs are very expensive. The proposed legislation would open up access to these orphan drugs under the 340b program in many situations, and would result in significant savings to our institution," said Judy Tartaglia, CEO Central Vermont Medical Center.
Welch's legislation would restore the original intent of Congress and close this loophole by limiting the "orphan drug' exclusion to only apply in instances where the drug is used for the rare condition or disease for which it was designated. This will ensure the "orphan drug' designation isn't exploited to prevent the offering of the 340B discount for non-orphan uses of the same drug.
As co-chair of the House Democratic Caucus Prescription Drug Task Force and the co-chair and co-founder of the House Affordable Medicine Caucus, Welch has repeatedly taken on the pharmaceutical industry. He has introduced the Medicare Prescription Drug Price Negotiation Act, which would allow the Secretary of Health and Human Services to negotiate drug prices directly with pharmaceutical corporations. Earlier this year Welch led the fight against Pfizer skirting American tax obligations while jacking up prices for American consumers. In January, Rep. Welch testified before the Vermont Senate Health and Welfare and the House Human Services and Health Care committees on drug pricing transparency.