This study was commissioned by the Oregon Primary Care Association to:
Rx|X carried out the study using a sample of four Oregon FQHCs. During December 2013, qualitative and quantitative data was collected from:
The 340B Program was created by the U.S. Congress in 1992 to help lower the cost of drugs to certain safety-net providers, called covered entities. These providers include FQHCs, public hospitals and other federal grantees. The 340B Program requires manufacturers to provide discounts on certain drugs purchased by qualified covered entities.
FQHCs purchase drugs from participating manufacturers at discounted 340B prices for eligible patients and accept contracted reimbursement rates for the drugs from Medicaid Managed Care Organizations (and, more recently, CCOs, which cover about 90 percent of Oregon’s Medicaid members). The discount does not always provide an advantage, since in some cases the reimbursement rate has been lower than the purchase price. When the reimbursement rate exceeds the purchase price, FQHCs have generally retained the difference and used these savings to benefit patients.
This is in keeping with the original intent of the 340B Program, which permits covered entities to “stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.”
This study found that Oregon’s FQHCs use the funding to carry out the federal intent in a variety of ways. All are designed to increase access and provide additional services for the vulnerable and underserved. The type and extent of assistance is dictated largely by the needs of the FQHC’s community.
FQHCs rely on the 340B funding to offset the costs of providing these and other important (yet unreimbursed) services. And as safety-net community providers, FQHCs use the funding to benefit all patients of the community, indirectly passing savings to the state as a whole.
The Oregon Health Authority (OHA) is considering a requirement that FQHCs and their contracted partner retail pharmacies bill CCOs only for the actual acquisition cost of 340B drugs, instead of accepting the contracted reimbursement rate. Any difference between the cost of the drugs and the contracted rate would be passed back to CCOs.
The study found that the proposed new mandate, or other additional regulations and restrictions on drug purchasing and/or billing, could lead to reduced access to pharmacies and services for Oregonians. Also, the sustainability of FQHC-retail pharmacy partnerships would be uncertain.
The study concluded that the 340B Program has been critical in supporting the Oregon safety net for many years. Policies that shift cost savings to the State may not actually be effective and could adversely impact patient care. FQHCs and CCOs should be permitted maximum flexibility to collaborate on program design and cost savings, to keep the focus on innovation and improving health outcomes.
Madeline Carpinelli Wallack is a founding director of Rx|X Consulting, a boutique, independent 340B advisory services group. She is a recognized leader in the industry with a Ph.D. in Social and Administrative Pharmacy and a 20-plus-year career dedicated to 340B with numerous senior roles within organizations such as the Office of the Inspector General, American Pharmacist Association, and serving as a Research Fellow at the University of Minnesota.
Suzanne Herzog has long been engaged with 340B policy matters, both in public and private sectors. She has a deep understanding of the complexity and interconnectivity of government pricing requirements, the penalties for non-compliance, and how Medicaid and the 340B programs are regulated separately, but function dependently. Suzanne holds a master’s degree in Public Policy from the University of Chicago and is co-founder of Rx|X Consulting, empowering clients with sophisticated solutions in the pharmaceutical regulatory market.