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States take action against pharmacy benefit manager’s 340b workarounds

With Community Health Centers’ funding facing challenges from pharmacy benefit managers, some state lawmakers are getting involved.

The centers are a nonprofit safety net created by Congress in 1965 to provide health care services to medically underserved communities both urban and rural. They are the medical home for 600,000 Missourians. They are funded by private insurance and Medicaid, federal government grants, and the 340b drug-pricing program. Under 340b, drug manufacturers agree to discount drugs to safety-net providers in exchange for their drugs being covered by Medicare and Medicaid.

Until recently, insurance companies and pharmacy benefit managers reimbursed the retail price, and the health centers were able to pocket the difference with the mandate they use the money to reach more eligible patients and provide more comprehensive services.

Colleen Meiman, a national policy adviser for state associations of Community Health Centers, said in recent years, the benefit managers have changed their approach. “What has happened in the past five to 10 years or so is that the PBMs have figured out, ‘Wait a second, you’re a health center. You’re eligible for 340b, we know you’re paying less for drugs than everybody else, so we’re going to reimburse you less for drugs,’ ” Meiman explained.

Meiman pointed out 22 states have passed laws against 340b workarounds. A bill to make these practices illegal died in committee in the Missouri Legislature last term.

Meiman noted for decades, the financial stability of Community Health Centers has relied in part on 340b savings, and pharmacy benefit managers are exploiting a loophole. “Just because you just recently figured out that there’s this loophole in the law, and you can get your hands on our savings, does not negate the fact that those savings are critical to keeping the primary-care infrastructure safety net in this country running,” Meiman contended. She added over time, the benefit managers’ tactics have evolved to avoid providing 340b drug access in the first place. “You’ll see ‘Oh you dispense 340b drugs, pharmacy? We’re not going to let you into our preferred network,’ is a favorite approach,” Meiman stressed. “‘We’re not going to cover 340b drugs anymore’, so there are many different ways of instead of just paying them less, just keep the patients from getting the 340b drug in the first place.”

Community health centers serve as the medical home for more than 30 million Americans of all ages.


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