Drug companies and hospitals are gearing up for a big battle on Capitol Hill over the future ofthe 340B Drug Pricing Program, the 25-year-oldprogram aimed at helping hospitals serving low-incomecommunities.

The program, which was signed into law by President George H.W.Bush, requires pharmaceutical companies to offer discounts on drugsto hospitals that serve a disproportionately large number oflow-income patients. Medicare in turn reimburses the hospital forthe market rate of the drug plus 6 percent.

The idea behind the program is that the hospital will use thesurplus from the Medicare reimbursement to invest in other criticalneeds. However, critics have alleged that there is littleaccountability over the use of the extra money and that hospitalsmay very well be using it merely to pad salaries or profits.

Last year, the Centers for Medicare and Medicaid Servicesannounced a rule change that would significantly reduce the Medicare reimbursement to 340Bhospitals. Under the new rule, which went into effect Jan. 1,Medicare will pay 340B hospitals 22.5 percent less than the salesprice.

A lawsuit brought by three hospital groups to blockimplementation of the new rule was thwarted by a federal judge latelast month. U.S. District Judge Rudolph Contreras reasoned that thegroups did not have standing to sue because the rule had not yettaken effect and harmed them.

While hospital representatives have said they plan on continuingthe court battle, noting that Contreras’ decision hinted that theymay have a case now that the rule has been implemented, they arealso furiously lobbying members of Congress to pass a bill to undothe new rule.

The hospitals’ pleas have been heard across the politicalspectrum. A bill introduced by Reps. David McKinley, R-W.Va., andMike Thompson, D-Calif., would block the cuts from taking effect. Anumber of U.S. senators from both parties have also signaled theirdiscomfort with the cuts.

Pharma is simultaneously waging an equally ferocious lobbyingeffort in support of a bill to increase the reporting requirementsfor 340B hospitals, which they claim have not been subjected toenough scrutiny about how many low-income patients they are servingand how they are using the extra money they’ve been receiving. Thatbill is also co-authored by members of both parties: Reps. ScottPeters, D-Calif., and Larry Buschon, R-Ind.

Peters, however, also signed a letter opposing the cuts to theprogram, suggesting that those who support increased accountabilityare not necessarily against the premise of the program.

ModernHealthcare reports that a hospital lobbyist suggested that alikely outcome of the battle will be a bill that seeks to broach acompromise between the two sides, perhaps increasing the Medicarereimbursement to 340B hospitals in exchange for greater reportingrequirements.