Drug Pricing Program That Supports AIDS Service Organizations Is Under Attack

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When tens of millions of people -- many of whom had no prior history of advocacy -- sprang to action last summer to demand that their congressional representatives keep their hands off Medicaid expansion and the Affordable Care Act's protections for those living with pre-existing conditions, it was in large part because they understood what they were fighting for on a gut level, and they knew the fight to be just. The GOP-led Congress was trying to take health care coverage away from 23 million people. It was not terribly hard to explain why those bills were bad and needed to be stopped.

But most health care issues are far more complex than that, even if the consequences can be just as disastrous. More often than not, some moral murkiness or complicated component to health care policy makes garnering support for or against any particular proposal particularly difficult. This is the case with the recent turmoil around 340B, a federal drug pricing program that most Americans have never heard of, but one that has caused an all-out scrum between the big pharmaceutical and hospital lobbies, with Ryan White clinics and community health centers caught in the tussle.

The 340B program is about as convoluted as you would expect a drug pricing agreement among medical providers, pharmaceutical companies, and the federal government to be. Created in 1992 and signed into law by President George H.W. Bush, section 340B, an amendment to the Public Health Service Act, was devised to provide certain outpatient medications at reduced costs to hospitals and clinics that serve vulnerable populations. The purpose of the program was to shield these medical providers from drastically rising drug prices and to allow them to serve more people -- while not eating into Big Pharma's bottom line.

Related: Administration Attacks on Drug Pricing Program Have Advocates Worried

Essentially, the 340B law states that if pharmaceutical companies want to be reimbursed by Medicaid and Medicare, they have to offer drugs at discounted prices to safety-net hospitals and clinics that provide a significant amount of care to the underserved, uninsured, and most vulnerable. After these hospitals and clinics purchase these drugs at reduced prices, they are in most cases still reimbursed for the full, non-discount price by insurers and are allowed to spend the 340B savings to provide additional care and services that they would not otherwise be able to provide. And, since all of these savings are generated through drug discounts, the program doesn't cause an increase in taxpayer-funded federal spending. In this way, 340B is able to meet its intended purpose to "stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services."

For Ryan White clinics and community health centers that serve people living with and affected by HIV, 340B savings are a vital lifeline that enables them to give their clients the quality health care they deserve. Because of the revenue generated from 340B, many AIDS service organizations have been able to significantly increase the assistance they provide, allowing them to expand to new locations, increase staff, stay open for longer hours, and provide services they otherwise wouldn't have been able to pay for.

Without the 340B program, AIDS service organizations, such as Thrive Alabama, that can't count on significant federal or state funding would be struggling to survive. Located in the deep red heart of northern Alabama, Thrive Alabama has managed to expand services to woefully underserved populations in large part because of the savings it has gotten from 340B. At a time when the Alabama state government and congressional representatives have remained adamantly opposed to Medicaid expansion and have been unwilling to meaningfully increase health care spending, Thrive Alabama has actually been able to increase the ways in which it serves people living with and affected by HIV in northern Alabama, thanks to 340B.

"The 340B Program has been a game changer in the life of Thrive Alabama," says CEO Mary Elizabeth Marr. "Without 340B funds, our clients would lose access to treatment and care in the rural areas of north Alabama."

However, despite the very real and significant benefits gained by AIDS service organizations from 340B, the pharmaceutical lobby and many in Congress and the White House have been pushing hard for changes to the program that would significantly reduce its scope and have a profoundly negative impact on the ability of people living with HIV to access care.

The line being pushed by the pharmaceutical industry and many members of Congress is that the 340B program is not operating as originally intended because hospitals that don't provide a significant portion of their services to underserved communities are taking advantage of it, causing drug prices to go up.

To this end, legislation has been introduced by Indiana Representative Steve Bucshon (The 340 PAUSE Act) and Louisiana Senator Bill Cassidy (The HELP Act) that would place a moratorium on certain new 340B hospitals and outpatient locations and mandate significant new reporting requirements.

There is certainly a kernel of truth to the accusation that certain hospitals are not using the 340B program as intended, but they are in the minority, and they certainly aren't the cause of spiking drug prices. The six billion dollars in 340B drug discounts provided in 2015 represent only 1.3% of total U.S. drug spending in that year. The pharmaceutical industry's crusade against 340B may be carried out in the name of lower drug prices, but its true motivation stems from the fact that the pharmaceutical industry doesn't like losing money.

Ryan White clinics and community health centers might not be at the center of the controversy raging in Washington over 340B, but that doesn't mean they won't catch collateral damage or be next on the chopping block. There is little reason to believe that the pharmaceutical industry will be content to end its lobbying against the 340B program if legislation like the 340B PAUSE Act and HELP Act is signed into law. If we don't stop Big Pharma from imposing its will on Congress and instituting these changes to 340B with regards to certain 340B hospitals, it will only a matter of time until AIDS service organizations are affected.

Ask yourself, would you rather give excess profits from overpriced drugs to the pharmaceutical companies who make them or to the hospitals and clinics that provide you with care? Just as we, as a community, were at the center of the fight to save the Affordable Care Act last year, so should we be there in the fight to save 340B.