Yesterday, Advocates for Community Health (ACH) hosted an important discussion, open to all community health centers (CHCs) and other stakeholders, on the latest federal 340B policy and reform. ACH, a national membership organization, is dedicated to visionary policy and advocacy initiatives that aim to effect positive change across the Health Center Program and the nation’s healthcare system.

“Even though we represent our community health center members in our policy and advocacy efforts, our 340C proposal and 340B advocacy work will benefit all community health centers,” said ACH CEO Amanda Pears Kelly in the discussion’s opening comments. “340B reform has been one of our top priorities since ACH’s inception three years ago. However, I am deeply concerned about recent 340B legislation that was introduced, which would be harmful to health centers and the patients and communities they serve.”

The 340B Drug Pricing Program is a critical tool that helps CHCs to expand access and fulfill their mission to care for those most in need. Since 1992, under Section 340B of the Public Health Service Act, this program has required drug manufacturers participating in Medicaid to sell certain outpatient drugs to eligible safety net entities at significantly reduced prices.

ACH, as a strong supporter of the 340B program, is committed to enabling health centers—critical safety net providers that provide care to all who seek it, regardless of insurance status or ability to pay—to provide care to more patients with expanded services and achieve better health outcomes. This commitment remains unwavering, even in the face of recent challenges.

ACH’s Position on the 340B ACCESS Act

While ACH strongly supports Congressional efforts to address ongoing issues within the 340B Drug Discount Program, including full reform, ACH is unable to support the 340 Affording Care for Communities and Ensuring a Strong Safety-Net Act (H.R. 8574, 340B ACCESS Act) in its current form. Many of the provisions in this legislation would result in an unacceptable reduction in the ability of health centers to leverage the 340B program, which would restrain their ability to care for patients and continue expanding access to care for those most in need.

ACH’s Analysis of 340B ACCESS Act

Elizabeth Lee, health policy consultant for ACH, covered ACH’s analysis of the 340B ACCESS Act and explained during the meeting that even though the bill mostly applies to hospitals, several of its provisions would make it very hard for health centers to continue to leverage the 340B program and gain access to critical benefits.

For example, in the patient definition section, 340B eligibility is determined on a prescription-by-prescription basis.

“This would be a huge administrative burden for community health centers, particularly smaller ones, and would significantly decrease the value of the program,” said Lee.

The patient definition section also notes that drugs must be dispensed or administered at the covered entity location, except for qualifying referrals, which are very limited, and require extensive paperwork to administer

Contract pharmacies can only be used in the covered entity service area, which will harm health centers particularly in rural areas that depend on contract pharmacies for dispensing drugs to patients who may not live close to the health center. The bill also includes new civil monetary penalties ($13,946 for each claim) for failing to comply with contract pharmacy regulations.

Lee explained, “The 340B Access Act will limit patient access to affordable medications, create new rules that do not align with HRSA regulations, and further reduce the value of the 340B program.  It permits FQHCs and other grantees to use contract pharmacies in a newly defined ‘service area’ that loosely overlaps (but may not be identical with, or fully cover) their BPHC-approved service area. This area is defined as ‘the public use microdata area’ or PUMA in which such entity is located and up to three PUMAs that are contiguous with the PUMA in which the entity is located.” Other participants noted that PUMAs can change over time due to government regulations.

There are also extensive requirements on for compliance that will be hard to maintain for health centers, and this legislation would preempt all 340B legislation that has been enacted at the state level

Under this bill, a CHC’s ability to access specialty drugs for its patients is unclear. The bill offers no further guardrails, restrictions, or criteria for establishing restricted distribution networks, among other issues related to access to specialty drugs for CHC patients.

ACH’s Position on Other 340B Reform Efforts

In March 2024, Congresswoman Doris Matsui (D-CA) introduced the 340B PATIENTS Act (H.R.7635), and ACH was happy to endorse this legislation. The 340B PATIENTS Act would protect and strengthen the 340B program by codifying 340B providers’ ability to use contract pharmacies to dispense 340B discounted drugs. This would ensure that 340B patients can pick up their prescriptions at any local pharmacy and that safety-net providers can continue providing expanded medical and social services to their communities using their 340B discount savings.

In April 2024, ACH submitted detailed comments regarding the Bipartisan Senate 340B Working Group’s request for information and discussion draft of the Supporting Underserved and Strengthening Transparency, Accountability, and Integrity Now and for the Future of 340B Act, or the SUSTAIN 340B Act. The bipartisan, thoughtful, comprehensive process being undertaken by the Working Group’s six Senators represents an important opportunity for 340B reform, taking into account feedback from varied stakeholders. ACH looks forward to continued engagement in this process.

ACH’s Solution: 340C Legislative Proposal

ACH’s Senior Vice President of Policy & Government Affairs, Stephanie Krenrich, said that ACH is urging Congress to prioritize the unique needs of health centers by enacting its 340C proposal. This proposal, which was developed by health center leaders, creates a voluntary subset of the 340B program that incorporates transparency and accountability measures and requires participants to invest all program savings back into patient services.

Entities that meet accountability standards would then be entitled to 1) Protection against discriminatory network and reimbursement actions by health insurers and PBMs, 2) unlimited use of contract pharmacies, and 3) reimbursement at wholesale acquisition cost (WAC) for all Medicaid drugs. 340C is an “opt-in” option for all 340B covered entities, not just for health centers.

The legislative proposal maintains key provisions of the original 340B program, including the prime vendor, certification processes, and a prohibition on resale of drugs. It provides HRSA regulatory authority to implement the legislation and authorizes appropriations in such sums as necessary.

For more information about 340C, please view our white paper or contact ACH’s SVP of Policy & Government Affairs, Stephanie Krenrich.