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.
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