ObamaCare kills discount drug deals to childrens hospitals

posted at 10:12 am on December 9, 2010 by Ed Morrissey

Nancy Pelosi told us that we needed to pass the ObamaCare bill to find out what was in it, but apparently we needed to pass it to find out what wasn’t in it as well.  Thanks to one of the 2800 pages that apparently no one in Congress read before voting on the bill, the new law has drug manufacturers canceling discounts to childrens’ hospitals that helped provide medicine to children suffering from rare diseases.  The change will cost these hospitals hundreds of millions of dollars, and will almost certainly curtail access to critical care for children:

In an unintended consequence of the new health care law, drug companies have begun notifying children’s hospitalsaround the country that they no longer qualify for large discounts on drugs used to treat rare medical conditions.

As a result, prices are going up for these specialized “orphan drugs,” some of which are also used to treat more common conditions.

Over the last 18 years, Congress has required drug manufacturers to provide discounts to a variety of health care providers, including community health centers, AIDS clinics and hospitals that care for large numbers of low-income people.

Several years ago, Congress broadened the program to include children’s hospitals. But this year Congress, in revising the drug discount program as part of the new health care law, blocked these hospitals from continuing to receive price cuts on orphan drugs intended for treatment of diseases affecting fewer than 200,000 people in the United States.

The discount program didn’t disappear altogether.  The new law mandates that rural hospitals gain access to the discount program, for instance, and the discounts still appear to be in effect for the clinics and community centers.  It appears that Congress bought that expansion at the expense of sick children.

Actually, it’s unclear whether anyone in Congress actually knew of the shift at all:

A House Democrat who worked on the health care law said the situation had resulted from “an honest mistake in drafting,” and he added, “No one intended to take away any of the drug discounts that children’s hospitals already had.”

Normally, that would be a little hard to believe, and obviously someone intended to curtail the discount.  It didn’t end up in the bill as a “mistake in drafting”; the tradeoff is rather transparent.  Congress wanted to expand a mandate on drug manufacturers to sell their most expensive products at steep discounts to rural hospitals as well as the community centers and clinics, and the drug manufacturers balked at eroding even more of their revenue, much of which goes to development of new medications and therapies.  Congress therefore cut out the children’s hospitals to strike a balance.

There’s no mistake in the drafting here, nor is this an unintended consequence, as the New York Times calls it.  There was a mistake in the priorities of Congress, and a big mistake in voting for a 2800-page bill without actually reading it.  But otherwise, this is precisely the kind of rationing that Congress intended to impose on the American health-care system. And it’s the children who get to pay for it first.

Now Congress wants to amend the law to restore the discounts to the children’s hospitals, and they have measures introduced in both the House and Senate to do just that.  The move will run into some serious opposition from the pharmaceuticals unless Congress eliminates others from the discount program, like the community centers, which they’re unlikely to do.  Congress would do better to repeal the entire monstrosity and work towards real reform of the health care system by eliminating the tax breaks for third-party payers and encourage moves to HSAs and catastrophic coverage instead of comprehensive, all-you-can-eat plans.


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