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As drugmakers cut off discounts, providers fret for low-income patients

Michael Ollove, Stateline.org on

Published in News & Features

Hospitals and community and rural health clinics that serve low-income patients say drug manufacturers have threatened their financial stability by dramatically cutting back their participation in a federal drug discount program that saves those health providers millions of dollars a year.

Without the drug discounts, the hospitals and clinics say, they are getting close to laying off health care workers, reducing hours or scaling back or scrapping mobile health vans, free cancer screenings, behavioral health treatment and a host of other services that help patients with low incomes who lack insurance.

“They are killing health centers,” said Jangus Whitner, who runs the pharmacy program for PrimaryOne Health, a community health center with more than 40,000 patients that operates 11 medical sites as well as five clinics in the Columbus, Ohio area.

“It is infuriating; it is egregious.”

Since 2020, more than a dozen drug companies have scaled back or halted their participation in a federal discount program known as 340B. Under the program, drugmakers sell their products more cheaply to safety-net health providers, hospitals and clinics that provide care regardless of patients’ ability to pay. In exchange, the government promises that Medicare and Medicaid will cover their products.

But in the past two years, 17 drug companies, including Bristol Myers Squibb, Gilead, Johnson & Johnson, Merck and Pfizer, have scaled back their participation in 340B. The drugmakers’ lobbying association, PhRMA, argues that the discounts have been used too broadly and for patients who could afford the drugs’ higher retail prices.

 

The drugmakers also don’t like providers allowing patients to get their prescriptions at “contract pharmacies,” drugstores that have arranged with 340B providers to fill prescriptions for their patients at the discounted prices.

The 340B discount for outpatient drugs is generally between 20% and 50%, according to a University of Southern California Schaeffer Center for Health Policy and Economics report, and in 2020 resulted in $38 billion in drug sales.

That year, about 12,700 safety-net providers were in the program, according to the U.S. Government Accountability Office.

“The 340B is critically important because it provides resources that allow us to achieve our mission to expand access specifically to a medically underserved population,” said Sue Veer, president of Carolina Health Centers, a community health center that operates a dozen medical clinics across western South Carolina.

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