The Impact of 340B on Minority Health

In 1992, bipartisan congressional action created the 340B Drug Pricing Program to lower drug costs for providers that care for a disproportionate share of low-income patients. Under the program, pharmaceutical manufacturers agree to extend discounts on outpatient drugs to qualifying safety-net providers and programs as a condition of participating in the large Medicaid and Medicare Part B markets. For vulnerable patients, these drugs are then provided for free or at a reduced cost. When an insured patient receives one of these discounted drugs, providers may use the proceeds to offer clinical care, update equipment or simply keep the lights on.

Like so much in the world today, the future for the 340B program to reduce health care disparities remains frustratingly murky. But one certain thing is that safety-net health providers will remain undeterred in their commitment to seeing that all patients receive the care they need no matter their circumstances. Safety-net health providers that participate in the 340B drug pricing program will be part of any solution to this disparity problem. Many 340B-covered entities – including hospitals, health centers, and clinics – focus their core missions on reaching and serving marginalized communities. The 340B program is also an essential component of the COVID-19 response. Increased flexibility for 340B-covered entities is necessary to address disparities faced by marginalized communities. 

Nationwide, nearly 1,400 HRSA-funded health center grantees operate approximately 13,000 sites, providing primary and preventive care on a sliding fee scale to nearly 30 million patients.  Over 91 percent of health center patients or families live at or below 200 percent of the Federal Poverty Guidelines and nearly 63 percent are racial/ethnic minorities.  Health center patients, including low-income individuals, racial/ethnic minority groups, and persons who are uninsured, are more likely to suffer from chronic diseases such as hypertension and diabetes. Clinical evidence indicates that access to appropriate care can improve the health status of patients with chronic diseases and thus reduce or eliminate health disparity.

The ongoing study conducted by APM Research Lab found that the death rate for African Americans infected with COVID-19 is 2.3 times higher than the rate for Whites and Asians. In 30 states, African Americans are dying above their population share, the study finds. The Centers for Disease Control and Prevention (CDC) noted similar findings pertaining to the burden of illness. The April 17, 2020, CDC Morbidity and Mortality Weekly Report (MMWR) noted that in a sample size of 580 COVID-19 positive hospitalized patients, 33% of patients were Black; for reference, the community’s Black population share was 18%. The data suggests that there is an overrepresentation of African Americans among hospitalized patients. 

Approximately 12% of the patients that 340B hospitals serve are African American, compared to just more than 7% at non-340B hospitals, according to a recent study. 340B hospitals also serve larger numbers of patients who are living with disabilities and who have very low incomes. This is another population that is made up disproportionately of people who are minorities. One in four patients served by 340B hospitals are eligible for both Medicare and Medicaid because of their income and disability status. Many low-income individuals, and especially those who are uninsured, rely on 340B hospitals for access to discounted drugs and care. African Americans and other minorities represent a higher percentage of 340B patients than other patient populations. 

As an added burden, millions of Americans have lost and continue to lose their jobs and their health insurance coverage, causing the volume of 340B patients to grow rapidly. These surges in patients cause entities to become reliant on affiliated offsite facilities for additional support. However, for new offsite facilities to have access to 340B drugs, a slow registration process is mandatory–a rate-limiting step in the entity’s COVID-19 response. 

Since poverty and poor health are inextricably linked, getting people back to work safely is vital for many reasons. Low-income and minority communities need targeted outreach and help to implement public health measures that can protect businesses, employees, and customers.

Channeling our attention into getting small businesses and, therefore, their communities back on their feet would be good for the whole economy, and good for getting the pandemic back under control. 

But recovery from COVID-19 isn’t only about improving the economy and controlling the spread of a virus. It’s also about ensuring that the individuals and communities who have suffered the most can firmly recover from this pandemic and be more resilient in the future. The challenge before us now is to create the conditions that make good health possible for all people. Our response to this challenge will truly be a measure of our humanity.

On May 17, 2021, the Biden Administration took its first major action impacting the 340B Drug Discount Program.  In a forceful statement, the Administration made plain its views on a major controversy that has pitted drug manufacturers against 340B covered entities for the past year - proclaiming that drug manufacturers are violating the 340B statute by restricting covered entity access to 340B discounts for drugs dispensed through 340B contract pharmacies. 

At the heart of 340B is a statutory mandate that drug manufacturers sell outpatient drugs to covered entities at or below 340B ceiling prices, for use by eligible patients of the covered entity. Some 340B covered entities to purchase and dispense 340B drugs through an in-house pharmacy but many more do so through a contract pharmacy arrangement, where the covered entity purchases the drugs for shipment to the contract pharmacy that oversees the dispensing of the drugs to qualified outpatients. Significantly, under contract pharmacy arrangements the 340B covered entities retain ownership of the drugs being purchased and remain responsible for 340B compliance.  

While the myriad of legal battles continues, it becomes more incumbent upon safety-net health providers to work even closer with the communities that they serve to tackle the social determinants of health that will lead to improved health conditions.