Amid potential cuts to Medicaid funding from Washington, some Illinois lawmakers, advocates and medical practitioners are pushing to protect access to a federal program that discounts prescription drugs in what could be a clash with the nation’s top drug makers.
Legislators in both chambers of the Illinois General Assembly are currently considering a bill that would prohibit pharmaceutical companies from restricting or interfering with drug discounts under what’s known as the 340B Drug Pricing program, established in 1992.
The program mandates drug makers participating in Medicaid to sell to certain hospitals and health centers at a steep discount. For insured patients, 340B also allows healthcare providers to bill insurance programs more than the purchase price and invest the savings in patient services.
Pharmaceutical companies have long been critical of the program, claiming it has outgrown its congressional intent at a high cost to the industry — in 2023, healthcare providers purchased $66.3 billion in drugs through 340B. Since 2020, several dozen companies have scaled back their participation by limiting the discounts to the healthcare providers’ in-house pharmacy or a single contracted third-party pharmacy.
Dr. Wesley Gibbert, a family physician at Erie Family Health Centers — a network of clinics across Chicago and its northern suburbs — said the 340B savings fund services and programs that “wouldn’t exist” otherwise at the health center.
Gibbert said many patients he works with utilize the program — 21% of Erie patients are uninsured, and 67% are insured through Medicaid — allowing them to fill prescriptions at neighborhood contract pharmacies at the discounted rates. The 340B savings also account for about one-fifth of Erie’s revenue, which the health center uses to fund services like in-house behavioral health therapists and substance use treatment, he said.
Restrictions on where and how patients can access the 340B discounts pose a significant burden to them and healthcare providers that operate multiple locations across counties, said Cyrus Winnett, the chief public affairs officer at the Illinois Primary Health Care Association, the trade group for the state’s 56 community health centers. It also strains a major source of revenue for the health centers to fund their operation, he said.
“What we have right now, as it stands, is health centers making difficult decisions, furloughing and laying off staff, and reducing access to services because of these restrictions currently in place, and they’re losing tens of millions of dollars annually,” Winnett said. “So as the number of restrictions continues to grow, the level of harm continues to grow with it.”
Negotiation among legislators and stakeholders on the Patient Access to Pharmacy Protection Act is still ongoing, said State Rep. Anna Moeller (D-Elgin), the House sponsor of the bill. However, she said she is hopeful it will pass this session.
In Washington, the recently passed Republican budget plan has instructed the House committee overseeing Medicaid to slash $800 billion in spending. Given looming cuts to the program, Moeller said further restrictions on 340B could create “a perfect storm of financial disaster” for clinics serving uninsured and underinsured patients.
“With what’s happening in Washington and with the uncertainty around Medicaid, it makes the bill even more urgent to get passed this year,” she said. “We’re going to do whatever we can to prevent Medicaid cuts, but we also need to get rid of these barriers that are reducing revenues to these clinics.”
The bill and its Senate counterpart have both received bipartisan support, including from Evanston’s elected representatives. In a statement to The Daily, Illinois House Majority Leader Robyn Gabel (D-Evanston) called the bill “a crucial step in safeguarding (the) right” to affordable medications. Likewise, State Sen. Laura Fine (D-Evanston) said in a statement that she looks forward to supporting the measure to advance healthcare accessibility.
Winnett said the IPHCA collaborated with the Illinois Health and Hospital Association on the bill’s language, which is modeled after similar legislation already passed in close to a dozen states.
However, the legislation is not without detractors. Pharmaceutical Research and Manufacturers of America, the leading trade group for the pharmaceutical industry, is among the organizations that have voiced opposition to the Illinois bill and similar efforts.
Because 340B is a federal program, PhRMA believes any regulation, including those regarding contract pharmacies, should occur at the federal level, rather than through a patchwork of state laws, a spokesperson for the trade group told The Daily.
PhRMA has also challenged 340B legislation on contract pharmacies in several states, including Arkansas, Louisiana and West Virginia. In December, the U.S. Supreme Court declined to hear PhRMA’s suit against Arkansas, leaving a lower court decision that upheld the state’s 340B regulation in place. The group declined to comment on its litigation strategy.
Mark Denzler, the president and CEO of the Illinois Manufacturers’ Association, which is also among the bill’s opponents, said his organization supports the original intent of the 340B program in providing discounted medication to low-income and underserved patients.
However, Denzler said the program’s growth and lack of transparency and oversight have allowed healthcare providers to profit at the cost of pharmaceutical manufacturers and employers footing the bill for their staff’s healthcare benefits.
“What (340B is) doing right now is imposing billions of dollars of cost on employers to essentially subsidize well-to-do hospitals,” Denzler said. “If we want to reduce cost in the system, we need to reform the 340B program, and this legislation does not do that. It further expands the program.”
Despite the pushbacks, Winnett said the need to maintain healthcare providers’ and patients’ access to 340B discounted drugs is urgent, especially in light of uncertainty surrounding Medicaid funding.
Gibbert echoed his sentiment. He said cuts to both Medicaid and 340B revenue would significantly impact Erie’s staffing and services.
While he acknowledged pharmaceutical companies and industry groups’ call for comprehensive, federal reform, Winnett said he does not anticipate such actions “anytime soon.” In the meantime, he said, state-level legislative efforts are necessary protections against industry limitations that threaten patient access to 340B and the financial stability of community health centers.
“What I don’t agree with is the tactic of putting these restrictions in place to force the issue that is ultimately resulting in harm to our most under-resourced communities.”
Email: c.he@dailynorthwestern.com
Twitter: @caseeey_he
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