Executive Summary

Study Objectives

This study was commissioned by the Oregon Primary Care Association to:
• Highlight the importance of the 340B Drug Pricing Program to Oregon’s
federally qualified health centers (FQHCs), and
• Evaluate the impact of a proposal from the Oregon Health Authority that
would require FQHCs and their contracted partner retail pharmacies to bill
Coordinated Care Organizations (CCOs) 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.

Rx|X carried out the study using a sample of four Oregon FQHCs. During December
2013, qualitative and quantitative data was collected from:
• Central City Concern’s Old Town Clinic (Portland),
• Virginia Garcia Memorial Health Center (Beaverton, Hillsboro, McMinnville
and Cornelius),
• Siskiyou Community Health Center (Grants Pass and Cave Junction), and
• Northwest Human Services (Salem and Monmouth).

 

Importance of the 340B Program to Oregon’s FQHCs

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.

Examples include:
• Financial assistance to patients unable to afford their prescriptions.
• Clinical pharmacy services, such as disease management programs or
medication therapy management.
• Student residencies and/or internships to provide additional pharmacy
services to patients.
• Outreach programs.
• Additional healthcare services, such as dental or behavioral health services.
• Registration of patients for manufacturer patient assistance programs.

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.

Impact Of a Potential Mandated 340B Acquisition Pass-Through to the State

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.

Conclusion

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.

 

Click here to read the full report.