340B: Why Do We Take A Hard Line?

340B: Why Do We Take A Hard Line?

Since 1992 there has been a recognition by the federal government that discounting pharmaceuticals for underserved, uninsured people are paramount to helping safety net providers design treatment plans for their patients. The 340B program provides that discount and for the past 27 years our community health centers (CHCs) have used this program in the way it was intended - helping safety net patients by passing along savings to them and providing the necessary services.

In the following years, covered entities (such as hospitals, community health centers, Ryan White programs, etc.) continued to utilize the program to provide more services to those in need. Unfortunately, some covered entities began abusing the program by purchasing pharmacies to place under their existing umbrella, thereby increasing their footprint for 340B, costing the program millions. At this time, there are over 28,000 hospital facilities using the 340B program. This has tainted the program, threatening its value.

A few years ago, Medicaid managed care organizations (MCOs) started to look at the discounts to those covered entities, and, as the contracting entity, began reducing those discounts, charging the providers more for their contracts. Pharmacy Benefit Managers (PBMs) began a program to increase the costs for drugs to these covered entities, including CHCs, at an alarming rate. Today, we are staring at a potential loss estimated at over $100M at CHCs here in Florida if the PBMs are allowed to continue their discriminatory and predatory practices.

What makes this problem different from the myriad of issues that impact our health centers nearly every day? And, why are we so focused on our attempts to fight this?

PBMs have found a niche market for themselves that has been made at the expense of not only the CHCs, but the patient as well; and those expenses are direct. The intent to do good in this program has been allowed to take a back seat to profit motives for the PBMs and MCOs. And so, the first reason to take the hard line on this is to protect the patients from price gouging. There is only one rationale for PBMs to take these funds: increase shareholder value/profits. Those profits are paid for by increased prices to the patients. If the covered entities are even passing along the discounts in the first place. I am more than hopeful that all of our community health centers do that.

The second reason for taking the hard line is that PBM actions can wreak havoc on a health centers bottom line. CHCs generally live on a low margin of between 2%-5%. Those dollars go right back into the operations of the center. They don’t increase stock value. In many cases, a CHC’s margin may BE the savings from 340B. It is a mandate that the Florida Association of Community Health Centers does everything possible to protect the solvency of our community health centers.

Finally, CHCs must not be considered an easy target for organizations to come after. They are recognized as the primary care safety net for Florida. Without community health centers, over 1.5M people would go without health care or would flock to hospital ERs across the State. There are consequences to the PBM approach to ripping these savings away from our centers. The cost is huge increases in the Medicaid bill as patients have nowhere to go but the ER. How does this make sense? Community health centers must remain a viable part of the safety net. FACHC will do everything we can to assure the integrity of Florida’s community health centers – Florida’s primary care safety net.

Best Regards-

Andy Behrman
President & CEO
Florida Association of Community Health Centers, Inc.

Hard work by Community Health Centers and Innovation lead Recovery Operations in Hurricane Michael Impact Areas

Hard work by Community Health Centers and Innovation lead Recovery Operations in Hurricane Michael Impact Areas

Hurricane Michael arrived and left in a day but the challenges of a recovering region are certainly still there. PanCare and North Florida facilities felt the brunt of Michael in locations up and down the panhandle coast, including communities they serve on the Georgia and Alabama lines. Both members temporarily lost several medical facilities during the first two weeks after landfall. Unfortunately, PanCare's admin and main dental site in Panama City along with its primary care and dental site in Marianna suffered serious enough damage to knock them out of operation for months to come.

Both overcame issues ranging from lack of electric, water, sewer, excessive debris, damaged/closed main roads, and dusk to dawn curfews just to open services again.  North Florida’s Wewahitchka site was temporarily utilized by the national guard and then suffered a large diesel fuel spill (since cleaned up by the private vendor).

Additional issues include disruption of staff due to widespread damages to their homes and apartments and shutdown of area infrastructure.  For the first week post-storm, there were no operating gas stations, grocery stores, banks, etc. open for miles and of course, basic municipal electric, water, sewer and gas services were gone.  Again, many staff members were dealing with unexpected homelessness and displaced family members.

For the last few weeks, PanCare has rolled out and positioned mobile units at locations in Panama City, Mexico beach, Marianna and several other high-need areas. With the shut-down of hospitals and many doctor offices due to damage, PanCare is one of the few primary care providers available to the stricken communities they serve.

All of these challenges were met with huge efforts by both CHC’s leadership and staff and plentiful assistance from our members and several NGO Aid organizations! 

Here is a short list of some of the actions taken to help stand-up medical services:

  • CHC members donating Hurricane Packs and other medical supplies and the use of mobile units for deployment.
  • PanCare staffed and rolled out all its mobile units to needed locations just a few days after storm impact; it consolidated its 15th street administrative site to its diesel generated 11th street site and also continued with primary care at this location.
  • PanCare began arranging for temporary housing for impacted staff, and was able to provide gas to staff through a private vendor from Texas along with gas cards from Direct Relief.
  • Bond CHC loaned its Mobile unit to N. Florida CHC so services in Havana FL could continue until that Health Center was operational.
  • The damaged PanCare sites in PC and Marianna now have field grade Medical tents being placed there by the International Medical Corps allowing them to offer regular services until the main buildings are fixed.
  • FACHC has worked with Direct relief and Americares on several donations of materials, including 3500 hygiene kits, two 15,000 watt portable gas generators, and cash donations to assist members.
  • County Emergency Management provided requested water, portable sinks, security, and portlets at our sites to help make them and mobile units operational.
  • We recently received EM priority service designations by ATT for PanCare’s new wireless hotspots to ensure adequate IP throughput.

There are many other small successes like the ones listed above and there is much more to be accomplished before we reach full recovery. We do need to recognize our helpers!  We sincerely appreciate the volunteer efforts by other members of FACHC, our NGO partners, and State ESF-8 community.  It has allowed the recovery efforts to proceed at a quickening pace while keeping a focus on service to the community and safety and well-being of staff. Thank you again for your efforts!  Other updates will follow.


Thomas J. Knox Jr., MPA
Director Emergency Preparedness &
Education Programs