A $300 million annual loss to New York State’s community health centers, a direct result of cuts in Medicaid, is not the only threat to their viability.
According to Laura Pasco, Chief Financial Officer for Hudson Headwaters Health Network, a program created by Congress 33 years ago to give healthcare providers such as Hudson Headwaters Health Network access to drugs at discounted prices is also threatened, not just by the federal government, but by big Pharma.
When creating the so-called 340B program in 1992, Congress intended to assist federally qualified health centers fund community-oriented operations by allowing them to retain the difference between the discounted prices which they pay manufacturers for drugs and the reimbursements awarded them by the insurers.
The discounts that health centers receive are significant: a reduction of 20% and 50% from the normal price. So, too, is the size of the revenues from the 340B program. Otherwise, the drug companies would have no interest in them.
“As the Medicaid cuts take effect, the 340B program is going to become an even more important of a source of revenue for community health centers,” said Pasco. “Preserving this program is a way to help sustain healthcare in our region.”
In recent years, the manufacturers have challenged expansions of the program that have allowed health centers lacking in-house pharmacies to contract with chain and independently owned drug stores to dispense 340B medicines to their patients.
Earlier this summer, companies such as Johnson & Johnson and Eli Lilly proposed rebating health centers and hospitals the discounts owed them, rather than honoring them upfront. They’ve persuaded the Health Resources and Services Administration (HRSA), the federal agency within the U.S. Department of Health and Human Services charged with overseeing community health centers, to create a pilot project to test the rebate model.
“Most 340B hospitals and health centers lack the cash flow to await a manufacturer’s deferred and delayed payments,” said Jessica Rubin, Hudson Headwaters’ Chief Impact Officer. “Our network could do that, for the time being, but not indefinitely. The rebate model is not a sustainable one.”
According to Hudson Headwaters, that not-for-profit uses revenues from the 340B program to offset the cost of services such as palliative care, home-based care, obstetrics and gynecology.
Since 2018, 340B revenues have also enabled the network to invest $68 million in renovating or constructing new health centers, not only in communities that could not otherwise support one, but those offering specialty services, such as women’s health care.
In 2019, for instance, $2.75 million in 340B revenues helped fund the renovation of the building in downtown Glens Falls housing Hudson Headwaters Women’s Health.
And in 2023, when a Glens Falls and Saratoga-based obstetrics and gynecology practice announced that it would close, Hudson Headwaters Health Network ensured that these services would remain available through its women’s health center.
The costs of providing those services at the center are now defrayed, in part, by 340B revenues.
“Without 340B revenues, we would not have been able to hire the additional providers and absorb additional patients,” said Pasco. “We would not have been able to expand a pediatric practice in Plattsburgh that allowed us to take 5,000 new patients.”
The revenues also support operations at health centers in communities such as Bolton Landing and Chestertown that might not be viable on their own.
Although 340B is a federal program, advocates and healthcare coalitions are increasingly turning to state capitals to protect it.
According to Stateline, a Pew Charitable Trust project that covers state capitals, eight states since 2021 have passed laws requiring drugmakers to keep selling discounted drugs to health centers without in-house pharmacies.
Pam Fisher, Hudson Headwaters’ Director of External Affairs, said New York is considering a similar bill: “The 340B Prescription Drug Anti-Discrimination Act.”
At Albany, the Community Health Center Association of New York State (CHCANYS) has been a strong advocate for non-profit, safety-net providers like Hudson Headwaters, said Fisher.
“In the Adirondacks and the North Country, we remained focused on our mission: maintaining, enhancing and expanding access to healthcare. It’s important that our legislators recognize that,” said Jessica Rubin.
