Massachusetts Health & Hospital Association The 340B Program: An Essential Lifeline for Patients & Providers
The Facts
What is 340B?
Who Participates?
Why is 340B Essential?
How Does the Program Work?
The Threat
A Solution Worth Protecting
In Their Own Words: How 340B is Helping Local Hospitals & Communities
The Facts:
- The 340B drug pricing program is an essential component of our safety net system, providing low-cost prescription drugs to patients and allowing hospitals to reinvest directly into their communities.
- Threats to 340B are a threat to hospital care.
- The program works. Preserving the 340B program for all eligible providers protects patient access, overall healthcare costs, and the stability of Massachusetts hospitals during a time of tremendous financial turmoil.
What is 340B?
The 340B drug discount program is a bipartisan federal program created to protect hospitals and patients from high drug costs, while maximizing scarce resources to support essential healthcare services for historically marginalized communities – all at no additional cost to taxpayers.
340B requires pharmaceutical manufacturers to sell outpatient drugs at discounted prices to healthcare organizations that care for uninsured and low-income patients. Federal authorities heavily regulate this program.
Who Participates?
340B organizations include federally qualified health centers, specialized clinics, and several types of hospitals, including critical access hospitals, sole community hospitals, rural referral centers, and public and non-profit disproportionate share hospitals (DSH) that serve low-income populations. In turn, patients in those communities are direct beneficiaries of the program.
Why is 340B Essential?
Savings from the 340B program allow eligible hospitals in Massachusetts to support patient services that would normally operate at a loss due to Medicaid and Medicare underpayment. By receiving discounts on expensive drugs from profitable pharmaceutical companies, hospitals are able to devote more resources to services that support their patients and communities, which improves healthcare access and advances health equity. Many community health programs are made possible through 340B savings, including those offering free vaccines, behavioral health and telehealth services, and free or discounted medications.
How Does the Program Work?
The 340B program empowers eligible hospitals to purchase certain outpatient drugs at a discounted price. This is especially critical at a time when pharmaceutical prices are growing rapidly and many patients have challenges affording the medications they need.
These savings are drawn from pharmaceutical profits. They account for just 3% of drug companies’ profits nationally.
The 340B discount price, set and regulated by federal authorities, is currently 23.1% less than the price that wholesalers pay to drug companies. Due to variation in wholesaler contract agreements, the federal government estimates the average discount to 340B hospitals to be between 25% and 50%. Hospitals then use the savings to support essential care services and make community investments.
340B allows hospitals to save on medications that they are already buying to care for their patients. When these medications are dispensed to patients at a pharmacy, a claim is generated and the patient’s insurance is billed. The reimbursement amount from the insurer is the same for both 340B and non-340B hospitals, meaning the 340B hospital achieves savings because it purchased the drug at a lower price. These savings are used to offset the costs of expensive pharmaceuticals, expand and maintain healthcare services, invest in workforce, subsidize government underpayment from Medicaid and Medicare, and support numerous community benefit programs.
THE THREAT
Contract Pharmacy & Manufacturer Discriminatory Practices
The powerful pharmaceutical industry has mounted a coordinated national effort to weaken 340B, as it seeks to maximize profits and eliminate the savings that make an enormous difference to local healthcare.
For-profit pharmacy benefit managers (PBMs) and drug manufacturers are already diverting savings away from 340B providers through discriminatory practices. The role of PBMs, which work for insurance companies and other entities to negotiate prices with drug companies, has become especially problematic. As is well documented, PBMs are incentivized to maximize their own profits, a goal that stands in direct conflict with the objectives of hospitals and clinics participating in the 340B program. These for-profit entities lack transparency in their negotiation and rebate practices and are widely criticized for inflating prices to support their own bottom lines. This opacity can obscure how much of the savings and discounts from the 340B program are actually passed on to covered entities like hospitals and clinics.
These mounting pharmaceutical industry restrictions are diminishing savings owed to 340B hospitals, while increasing margins for drug manufacturers and for-profit pharmacy benefit managers/wholesalers. And they are being imposed at the worst possible time, as hospitals continue to struggle financially and face hardships with workforce shortages and increased medical supply and medication costs. Cuts to the 340B program would be devastating to local hospital finances, which are already extremely unstable. According to the Center for Health Information and Analysis, 75% of hospital health systems are operating in the negative through Q1 of FY2024. The statewide median operating margin stands at negative -0.1% and 50% of hospitals are operating in the negative.
Meanwhile, drug companies’ revenue grew by an estimated $347 billion between 2017 and 2022.
Without 340B savings, Massachusetts hospitals may have to limit certain patient services and free care offerings, meaning already at-risk communities would lose access to valuable, life-saving care and medication.
Closer to Home
In addition to challenges posed by for-profit drug companies, Massachusetts 340B hospitals will lose additional savings due to a MassHealth reimbursement restriction.
In January, the Executive Office of Health Human Services (EOHHS) issued Bulletin 109 to its Managed Care Entities directing those managed care plans not to reimburse certain drugs prescribed to MassHealth members if the drugs were purchased through the 340B drug pricing program. EOHHS will only allow the managed care plans to pay for the listed drugs when providers use “non-340B stock.”
Based on feedback from hospitals, this policy will have serious negative implications to provider finances and operations, which in turn will negatively affect patient access to these drugs and other important services. In fact, the effect of the proposed MassHealth policy will be greater than the loss of 340B margins that eligible hospitals currently receive. Of greater concern, this payment policy will have even more significant ramifications if EOHHS expands the number of drugs subject to the new payment directive.
A Solution Worth Protecting
The 340B program is a rare solution that improves care access for patients, manages overall healthcare costs, and helps keep local hospitals viable. Without it, many patients could have trouble getting the affordable medications and critical health services they need, jeopardizing their health and wellbeing.
Massachusetts simply cannot afford to see the program weakened. Local policymakers, regulators, and healthcare leaders all play a role in preserving this essential resource.
In Their Own Words: How 340B is Helping Local Hospitals & Communities
Below are short snippets from local hospitals that illustrate the integral nature of 340B in their service to patients and daily operations.
Baystate Health serves about one million people throughout western New England. We are the largest employer in the region, with over 13,000 employees. Our 340B savings help support operations at Baystate Medical Center, Baystate Franklin Medical Center and Baystate Noble Hospital. Those savings allow us to continue to provide access to care for all patients, regardless of income level.
We use our 340B savings for our Pharmacy Discharge Prescription Service, to provide clinical service at our community health centers, to supply Narcan to first responder, and to embed trained pharmacy liaison at key locations.
The 340B discount pharmaceutical pricing program supports critical programs for the Beth Israel Lahey Health patient community. This program supported the construction and continues to support the on-going operations of an on-site pharmacy at the Bowdoin Street Health Center in Dorchester. This health center based pharmacy has expanded access to medications for the health center’s approximately 11,000 patients and other members of the Bowdoin-Geneva community. The Bowdoin-Geneva neighborhood is among the most densely populated and diverse urban communities in the state. 90% of the residents in this neighborhood are Black, Latino, Asian or multi-racial and households in the Bowdoin-Geneva neighborhood are more likely to be linguistically isolated than households across Massachusetts and the nation, meaning that no person in the home age 14 and over speaks only English and no person in the home age 14 and over who speaks a language other than English speaks English “very well.”
Integration of the pharmacy and clinical care teams brings a higher level of care management and engagement with patients to help with medication management and adherence. Distributing prescriptions and instructions in a patient’s preferred language and having pharmacists available on-site that patients feel comfortable with and see as a part of their community, opens up opportunities for patients to share things like how a medication made them feel, or for a pharmacist to ask if a patient remembered to take a prescription with food or knows not to take certain medications at the same time.
The BILH Pharmacy at Bowdoin Street Health Center is a significant addition to the important resources the health center has provided in the community for decades. With an on-site pharmacy, care teams and pharmacists can work closely together on innovative approaches to medication management that will help our patients and the community live healthier lives.
Heywood Healthcare, Inc consists of two hospitals; Heywood Hospital, which is a general acute care hospital located in Gardner MA, and Athol Memorial Hospital located in Athol MA. Athol Hospital is a Critical Access Hospital. Approximately 70% of Heywood Healthcare hospital revenues are generated by patients who have government insurance coverage.
In addition to general acute services, Heywood Hospital has two mental health units (Geriatric and General Mental Health), high-volume ambulatory surgical and specialty care inclusive of oncology, hematology, rheumatology, endocrinology, and gastroenterology.
Athol Memorial Hospital also provides general acute services. In addition, some of the acute beds can be used as “Swing beds”. Athol Hospital also operates a 24/7 emergency room and ambulatory oncology and hematology services.
Heywood Healthcare relies heavily on the 340B program to deliver affordable care and
subsidizes needed services to the communities it serves. The savings on pharmaceuticals and the revenue generated from the “contract pharmacy” programs allow us to support needed community services.
Any material change to the 340B program will cause Heywood Healthcare to re-evaluate the services it provides to its communities. This may cause Heywood to reduce or close those needed community services that it can no longer support.
Mercy Medical Center is committed to being a transforming, healing presence within the communities it serves. Guided by our charitable mission and core values, our work extends far beyond hospital our walls. We continually invest resources into our communities to meet the health needs of underserved and vulnerable community members, bringing them healing, comfort and hope. Through our community benefit initiatives, we help to make our communities healthier places to live.
Mercy uses the 340B program savings to help our community by identifying and responding to the community’s unmet needs. A great example of this is Mercy’s Healthcare for the Homeless (HCH) program. Since 1983, HCH has been an ongoing and expanding effort to identify homeless persons in Western Massachusetts, assess their needs and resources, deliver health and social services and evaluate their impact. Services are provided throughout the year on a daily basis with back-up arrangements for 24-hour, emergency on-site coverage throughout Hampden, Franklin and Hampshire counties. Mercy Medical Center is the cornerstone of the HCH program, providing laboratory, X-ray and inpatient services to clients. HCH nurse practitioners are credentialed and have on-staff privileges at Mercy Medical Center, and the Mercy Emergency Department provides an extra layer of coverage.
Tufts Medicine has two 340B eligible covered entities in our system – Tufts Medical Center located in Boston, MA and Lowell General Hospital in Lowell, MA. As Disproportionate Share Hospitals (DSH), our patient mix comes predominantly from public payers, equating to over 66% across our system. Our 340B savings affords our hospitals to remain committed to serving high-need communities and caring for significant numbers of Medicaid and Medicare patients. Tufts Medical Center provides a wide range of specialty care for the community in Boston’s Chinatown neighborhood and surrounding areas, including an infectious disease (ID) clinic.
Some examples of how the 340B program helps our most vulnerable patients:
At Tufts Medical Center, the care team at the ID clinic is able to provide additional services for patients such as resistance testing for HIV medications, allowing the team to use a patient-specific approach to medication management with the help of two pharmacists in the clinic. Without savings from the 340B, the hospital would not be able to provide personalized care and service for these complex patients, who are usually on at least 5 medications, manage their medication regimens to optimize treatment outcomes, monitor adverse effects, support adherence, and prevent readmissions. Today, at Lowell General Hospital, the savings from the 340B program support a substance use disorder clinic. Services provided by this clinic include medication assisted treatment, clinic funded transportation to local detox facilities, and connection to outpatient programs. Substance use disorders are very prevalent in the Lowell community. This clinic provides essential support to our patients and is a key part of the population health efforts at Lowell General Hospital.
As a safety-net system, UMass Memorial Health (UMMH) provides essential health services to a disproportionate share of publicly insured and uninsured patients in Central Massachusetts. The 340B prescription drug program is a lifeline for systems like ours, helping us offset funding shortfalls from low reimbursement rates and consistently meet the needs of underserved patients in the region.
Through 340B, hospitals like UMass Memorial Medical Center operate specialty pharmacy and contract pharmacy services, which provide convenient medication and integrated care management services for patients living with serious conditions. 340B also supports the Medical Center’s Meds to Beds program, which delivers discharge medications to patient hospital rooms, and the Child Protection Program, which is the only comprehensive program in the region that addresses clinical issues associated with child abuse, neglect and placement in substitute care.
340B savings also support robust Community Benefits programs at all UMMH hospitals. These programs include charity care, subsidized health services, education, research, community-based programming and social services partnerships, many of which would be at risk of elimination without savings associated with 340B. At the Medical Center, 340B savings in 2022 resulted in $19.6 million for Community Benefits programs, serving nearly 39,000 individuals that year. These savings are essential to the work we are doing in Central Massachusetts.
The 340B Drug Discount Program significantly benefits our healthcare organization by enabling us to stretch our limited resources further, thereby enhancing our ability to provide comprehensive care to underserved populations. By accessing medications at reduced prices, we can allocate more funds to other critical areas such as patient services, community outreach, and healthcare infrastructure. This program allows us to offer a wider range of treatments and ensure that our patients receive the medications they need, regardless of their financial situation. The savings generated through 340B also support our efforts to maintain and expand vital health programs, ensuring that we can meet the evolving needs of our community effectively. For instance, with our savings we are able operate three renal dialysis centers throughout Berkshire County, providing access to patients in remote, isolated areas. We are also able to provide the full array of services to the community; behavioral health and Substance Use Disorder, hematology/oncology, neurology, neurosurgery, endocrinology, cardiology, urology, GI, and Rheumatology.
From a community perspective, the 340B Program plays a crucial role in improving public health outcomes. By reducing the financial burden on patients, especially those from low-income backgrounds, the program increases medication adherence, which is vital for managing chronic conditions and preventing hospital readmissions. Additionally, the resources freed up by the program enable us to invest in preventive care and health education initiatives, fostering a healthier community overall. The 340B Program thus not only enhances the quality of care we provide but also strengthens the overall health infrastructure of our community, making healthcare more accessible and equitable for all residents.
The 340B Program is essential to Cambridge Health Alliance (CHA), Massachusetts’ only public hospital system. With the highest mix of Medicaid and uninsured patient care in the state, CHA relies on the 340B program to support its core mission of patient care for all, including the vulnerable populations it serves.
With retail pharmacies closing across the state, CHA provides essential access to medications and pharmacy services, annually filling nearly 700,000 prescriptions through its retail pharmacy program. 340B Program savings enable CHA to offer services that improve prescription medication access such as home delivery, bedside delivery, prescription financial assistance, and to provide patient education and medication therapy management.
More broadly, CHA depends on the savings that CHA realizes through the 340B Program to subsidize the essential but poorly reimbursed healthcare services that it provides. Without the 340B savings, CHA would need to dramatically curtail the services it provides. Preserving access to the full benefits of the 340B Program is essential to preserving CHA’s ability to provide needed access to care for the patients and communities it serves.
Holyoke Medical Center (HMC) has a public payer mix that is greater than 75%. Because of this high percentage, cost saving initiatives such as the 340B program are essential to our institution and our community. The 340B program helps HMC to continue to provide and expand high-quality healthcare to a vulnerable population. These services include comprehensive ambulatory pharmacy services, medication management, community navigation, clinics to address substance use and mental health disorders as well as vital cancer care.
As a world-class academic medical center, patients come to Mass General Brigham from all over Massachusetts, New England, the United States and even the world for life-saving treatments. We use 340B savings to give real benefits to these patients. How?
- With or without insurance or money, patients needing care are never turned away
- Discounted or free medication to the underinsured or uninsured
- Enhanced clinical services like our new Diabetes Management Program or our Behavioral Health Initiative
- Preventive care offered with health screenings and vaccinations
- Health education and outreach initiatives in Community Health programs
- Housing initiatives, nutrition programs and transportation services
We are grateful for the cost savings through 340B that helps Mass General Brigham serve our patients every day.
Savings achieved through the 340B program allow Southcoast Health to fulfill our mission as a non-profit health system to reinvest in the communities we serve. In FY23, we administered and supported programs that address urgent issues in our region, including behavioral and mental health, maternal/child health, chronic disease, health equity, food insecurity and homelessness. Southcoast’s sponsorship of and participation in these programs is possible in part by savings achieved through the 340B program.
Highlights include:
Behavioral Health/Substance Use Intervention
New Beginnings is a Moms Do Care-recognized program that provides multidisciplinary, peer-led, wrap-around support for pregnant, postpartum, and parenting women with a history of substance use. In FY23, we expanded the program to include family advocates, a social worker, and other program personnel, and extended our support of new mothers to three years postpartum. New Beginnings is funded through a combination of Southcoast resources, philanthropic and grant funds.
Cancer Outreach
Southcoast provided seven free cancer education, awareness, and prevention virtual seminars focused on breast, lung and colon cancer, and risk factors that make these cancers especially prevalent in the South Coast region. By expanding this seminar series, we saw an 89% increase in attendance from the previous fiscal year.
Coalitions to End and Prevent Homelessness
Southcoast sits on the Executive Committee of the Homeless Service Providers Network (HSPN), which works to ensure every individual and every family has access to appropriate, sustainable, safe, decent, and affordable housing. We partner with community organizations and members to identify short- and long-term solutions to homelessness.
Economic Opportunity
To help improve early childhood development, we are the lead partner of The Health Equity Early Development Coalition’s The Basics, Southcoast program. The Basics provides parenting and caregiving principles that support social, emotional and cognitive development in children from birth to age three. We also create career pathways for high school and college students through our clinical rotation programs.
Healthy System and Environment Change
In FY23, Southcoast hosted 40 free online educational seminars on topics such as breast cancer, weight loss, advance care planning, orthopedics, heart health, lung cancer, palliative care, colon cancer, and women’s health. In addition, Southcoast works to combat food insecurity by partnering with community organizations to provide local, healthy, low-cost produce and meal opportunities such as farmer’s markets and mobile pop-up markets.
Maternal Child Health Education and Outreach
Our Baby Cafés provide friendly and comfortable hybrid drop-in sessions for pregnant and breastfeeding mothers to learn more about breastfeeding, share tips and techniques, and socialize with other moms. Peer support and one-on-one help from specially trained health professionals is available, including professional lactation support.
Comprehensive Pharmacy Services
340B savings allow Southcoast to operate our retail and specialty pharmacies by offsetting the cost, and low reimbursement, of branded drugs. With a financially viable pharmacy service, we directly help patients by: dispensing medications to patients after discharge before they leave the hospital premises, helping avoid complications and readmissions; resolving clinical and coverage issues when they arise; and assisting patients with finding financial assistance.
As you can see, the 340B program is an essential part of our community-first approach to healthcare, and we strongly support its continued support at the state and federal level.