[Congressional Record Volume 151, Number 129 (Thursday, October 6, 2005)]
[Senate]
[Pages S11230-S11231]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. THUNE (for himself and Mr. Bingaman):
  S. 1840. A bill to amend section 340B of the Public Health Service 
Act to increase the affordability of inpatient drugs for Medicaid and 
safety net hospitals; to the Committee on Finance.
  Mr. THUNE. Mr. President, the rising cost of prescription drugs has 
squeezed not only the budgets of American consumers but also the 
budgets of America's health care providers. The rural hospitals in my 
State of South Dakota serve as a lifeline to thousands of constituents 
living in medically underserved areas. They cannot afford to have the 
cost of their inpatient and outpatient drugs rising faster than the 
rate of inflation.
  In 1992, Congress created the 340B program to lower the cost of drugs 
purchased by a limited number of entities serving a high number of low-
income and uninsured individuals, such as federally qualified health 
care centers and nonprofit hospitals providing care to a 
disproportionate share of Medicaid patients.
  Under the 340B program, pharmaceutical manufacturers are required to 
provide eligible 340B entities discounts on outpatient drugs as part of 
the manufacturers' Medicaid participation agreement. The rising cost of 
prescription drugs has created the need to modify the 340B program and 
extend these discounts to the inpatient side of disproportionate share 
hospitals, as well as to critical access hospitals.
  Today, I and my colleague from New Mexico, Mr. Bingaman, are 
providing relief on the cost of drugs purchased by America's health 
care providers by introducing the Safety Net Inpatient Drug 
Affordability Act.
  Our bill extends the 340B discounted drug prices to inpatient drug 
purchases of disproportionate share hospitals and allows critical 
access hospitals to participate in the 340B program. This not only 
saves hospitals money on the cost of drugs, it relieves them from the 
burden of carrying two different inventories for inpatient and 
outpatient drugs.
  Our legislation also generates savings for the Medicaid program by 
requiring hospitals that participate in the 340B program to rebate 
Medicaid a percentage of their 340B savings on inpatient drugs 
administered to Medicaid patients. Specifically, the Safety Net 
Inpatient Drug Affordability Act would require disproportionate share 
and critical access hospitals to determine the acquisition cost of 
drugs used on Medicaid patients and apply the minimum Medicaid rebate 
percentages applicable to outpatient-dispensed brand name and generic 
drugs.
  Extending the 340B program to critical access hospitals also helps 
reduce expenditures in the Medicare Program. Critical access hospitals 
are a vital part of the rural health care delivery

[[Page S11231]]

system. They provide emergency outpatient and limited inpatient care to 
individuals in remote rural areas. Out of the 61 hospitals in my State 
of South Dakota, 37 qualify as critical access hospitals.
  Outpatient care in critical access hospitals is reimbursed by 
Medicare at 101 percent of reasonable costs. Allowing critical access 
hospitals to participate in the 340B program will lower the cost of 
drugs in the outpatient setting and ultimately lower the cost of care 
provided by these hospitals. Decreasing the cost of care in critical 
access hospitals lowers the amount the Medicare Program expends on 
reimbursement.
  The Safety Net Inpatient Drug Affordability Act is commonsense 
legislation that reduces the cost of drugs for health care providers 
serving society's most vulnerable citizens. Lowering the cost of care 
in these settings means lowering the cost of health care for all 
American taxpayers. I look forward to working with my colleagues on 
both sides of the aisle in getting this bipartisan legislation passed 
and signed into law.
                                 ______