Massachusetts Health & Hospital Association


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340B is Under Attack, and Why That Matters in Massachusetts

The 340B program, in the crosshairs of the pharmaceutical industry and the subject of various court cases that ultimately may reach the U.S. Supreme Court, is receiving protection from state legislatures around the U.S.

Section 340B of the Public Health Service Act requires pharmaceutical manufacturers participating in Medicaid to sell outpatient drugs at discounted prices to healthcare organizations that care for patients that have been disproportionately underserved. Hospitals use 340B savings in many ways based on the unique needs of the populations they serve.

One benefit hospitals rely on – especially smaller hospitals that do not have robust in-house pharmacies — is the ability to use pharmacies in the community (so called “contract pharmacies”) to dispense drugs on their behalf to their eligible patients. Drug manufacturers have been fighting in the courts to erase the 340B contract pharmacy flexibility. In May, the U.S. D.C. Circuit Court of Appeals ruled in favor of Novartis and United Therapeutics, saying the Health Resources and Services Administration had gone too far in limiting manufacturers’ rights to distribute the drugs in the pharmacies of their choosing. But the court stressed its ruling was specific to that single case in that particular jurisdiction. A similar case in the Seventh Circuit – Eli Lilly and Company, et al. v. Xavier Becerra, et al. – is still pending; conflicting opinions from different circuits could eventually drive the case to the U.S. Supreme Court.

Another important case, this one in the U.S. Court of Appeals for the Eighth Circuit, found that an Arkansas state law permitting hospitals to get 340B drug discounts at community pharmacies was entirely appropriate. The American Society of Health-System Pharmacists says that 28 states have either already approved, or are pursuing, legislation similar to the Arkansas law that protects patients’ ability to get their drugs through local pharmacies or through the mail, without having to visit their hospitals.

In Massachusetts, the Senate-passed PACT Act (see story below) recognizes the important role of contract pharmacies for some, but not all, 340B providers. MHA is advocating for changing the PACT Act language to extend the contract pharmacy protection to all providers that are recognized by federal law as being “340B entities.”

While the court cases and legislative activity occurs, hospitals say the real-world benefits of receiving drug discounts from the profitable pharmaceutical industry, and using those savings for improved patient care, are too essential to lose.

What 340B Means to Massachusetts Hospitals

The 340B program allows pharmaceuticals to be distributed to patients at below market cost. The savings that hospitals get from the program are used to fund other health programs in underserved communities, with patient populations whose lower incomes and specific social determinants of health have historically resulted in poorer health outcomes for them.

Recently, MHA members weighed in with specific examples of how 340B benefits their service to communities. Some responses follow:

Mercy Medical Center in Springfield uses 340B program savings to help fund its Healthcare for the Homeless program, which since 1983 has identified homeless persons in western Massachusetts, assessed their needs and resources, delivered health and social services to them, and evaluated the effects of the program. 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.

Berkshire Health Systems (BHS) located in Pittsfield and serving many western Massachusetts communities says savings generated through 340B supports its efforts to maintain and expand vital health programs, such as the operation of three renal dialysis centers throughout Berkshire County. By reducing the financial burden on patients, especially those from low-income backgrounds, the 340B program increases medication adherence, which is vital for managing chronic conditions and preventing hospital readmissions, BHS says.

The Tufts Medicine system has two 340B eligible entities serving underserved populations – Tufts Medical Center in Boston and Lowell General Hospital, which are both disproportionate share hospitals. Tufts Medical Center uses 340B savings in its infectious disease clinic in Boston’s Chinatown to provide services such as resistance testing for HIV medications. Without 340B savings, Tufts says it would not be able to provide personalized care and service for these complex patients, who are usually on at least five medications, and who require medication regimens to optimize treatment outcomes.

At Lowell General Hospital, the savings from the 340B program support a substance use disorder clinic that provides medication assisted treatment, clinic-funded transportation to local detox facilities, and connection to outpatient programs.

In coming weeks, MHA will continue to show the important, long-standing link between the 340B drug pricing program and healthcare outreach to affected communities, as well as the persistent attacks on the program from the pharmaceutical industry.

Safe Bet: Hospital EDs Were Busy Last Week

We won’t know until the Center for Health Information and Analysis (CHIA) publishes the final data next year, but if recent national and local trends hold true, last week, and specifically July 4, was probably the busiest of the year for hospital emergency departments.

In 2023, CHIA reported that July saw 195,649 ED visits in July, more than any other month and bookmarked by the months at the beginning and end of summer – May and September. National data also shows that July is the busiest months for ED visits. Emergency departments throughout the U.S. have seen worsening crowding issues in recent years due to workforce shortages, the inability to discharge patients to the next level of care, and a host of other factors.

But specifically to July, heat, swimming, excessive drinking at barbecues, and – of course – people playing with fireworks are often identified as the reasons for the ED uptick.

Deadlines vs. Uncertainty: The State of Healthcare in July

EDs aren’t the only part of the healthcare system that will be busy in July; a number of important actions that could transform the system in the years ahead face deadlines this month.

Bids for the purchase of some or all of the Steward Health Care hospital in Massachusetts are due on July 15, with an auction occurring if there are multiple bidders on July 18. Who gets what and any additional changes to the existing Steward infrastructure should be known in just a matter of weeks.

Meanwhile, the legislature will have until the end of the session on July 31 to work out potential solutions to numerous healthcare-centric bills. The Massachusetts House passed a big system oversight bill this year that will determine how the influential Health Policy Commission (HPC) operates into the future, among other major changes. A Senate companion bill is known to be in the works. The House also passed legislation addressing maternal health and substance use disorder, which now require action from the upper chamber. The Senate passed the PACT Act, which expands the scope of the HPC and the Center for Health Information and Analysis to include oversight of the pharmaceutical industry, and extends licensing to pharmacy benefit managers, among other things. The House has not yet taken up that pharmacy bill.

And what about the FY2025 budget still in conference committee? That, too, is due to Governor Healey before July 31.

By contrast, there is little end in sight when it comes to the fundamental issues plaguing the care delivery system.

“These deadlines are an important reminder that hospitals and health systems don’t have an imminent end date for their deepening challenges,” said MHA President and CEO Steve Walsh. “It’s a daily fight for them to stay afloat for their patients, just as it has been for four-plus years. This dynamic will still persist even after the Steward situation is resolved and after this legislative session concludes. That’s why it is essential that the needs and voices of providers remain front-and-center through every meaningful policy conversation our commonwealth undertakes.”

John LoDico, Editor