Welch bill to reduce prescription drug prices for rural hospitals

News Release — Rep. Peter Welch
June 14, 2017

Kate Hamilton
(202) 440-3340

Welch Introduces Legislation to Cut Prescription Drug Prices Purchased for Patients by Rural Hospitals
Bill would close a costly loophole in federal program, assisting Vermont hospitals

WASHINGTON––Rep. Peter Welch (D-VT) has introduced bipartisan legislation to close a loophole in a federal drug discount program that is driving up the cost of prescription drugs purchased by rural hospitals and other eligible providers for their patients. The bill is the latest Welch initiative to address the escalating cost of prescription drugs for consumers and providers.

The Closing Loopholes for Orphan Drugs Act (H.R. 2889) would lower prescription drug costs for several hospitals in Vermont, including Central Vermont Medical Center, Rutland Regional Medical Center, Brattleboro Memorial Hospital, Southwestern Vermont Medical Center, and Northwestern Medical Center.

“Vermont’s community hospitals rely heavily on savings from federally mandated discounted prescription drugs to provide high quality affordable health care in the communities they serve. My legislation would close a loophole that allows drug companies to deny discounts for certain drugs,” Rep. Welch said.

“We are grateful to Representative Welch for his ongoing commitment to the vitality of hospitals and the communities they serve,” said Jeff Tieman, President and CEO of the Vermont Association of Hospitals and Health Systems. “Rep. Welch’s 340B legislation reinforces the program’s support of rural hospitals and will provide Vermonters with greater access to life-saving treatments.”

The federal 340B Drug Pricing Program requires drug manufacturers to provide outpatient drugs to eligible health care providers at significantly reduced prices. Eligible providers include Federally Qualified Health Centers, Critical Access Hospitals, Ryan White HIV/AIDS Program grantees, and hospitals and specialized clinics serving a high proportion of Medicare and Medicaid patients.

Current law allows drug companies to deny discounts to these providers for so-called ‘orphan drugs’ that treat rare diseases. Drug companies have taken advantage of a loophole in the law that allows them to more broadly define which drugs they discount.

Welch’s legislation would close the loophole and restore the original intent of Congress in the 340B program. Specifically, it would clarify that the ability to deny discounts to providers applies only in cases where a drug is used for the rare condition or disease for which it was approved by the Food and Drug Administration.

The legislation is cosponsored by Rep. Gregg Harper (R-MS). The full text of the bill can be found HERE.

As co-chair of the House Democratic Caucus Prescription Drug Task Force and the House Affordable Medicine Caucus, Welch is a leading advocate in the House on efforts to cut the cost of prescription drugs. In addition to this 340B bill, he has introduced legislation to authorize the federal government to negotiate with drug companies to lower Medicare drug prices and to legally import safe and low cost drugs from Canada.

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