New York's 340B changes could cost providers $30M and 300 jobs

Some New York hospitals and nonprofit healthcare organizations say a change in the way the state manages the 340B prescription drug program could lead to losses of up to 300 jobs and $30 million, Buffalo Business First reported Feb 8.

The program allows organizations serving high populations of low-income patients on Medicaid to get a discount on outpatient prescriptions equal to what the federal government pays, the report said. Providers in the program then bill commercial payers at the regular rate, reinvesting the difference.

Effective April 1, New York is changing how the program works, with providers seeing a small portion of the savings as a pharmacy dispensing fee, the report said. The state will keep the majority of the savings after the change.

Buffalo-based Evergreen Health could see $13 million in annual losses to its $117 million budget due to the changes, the report said. It had used those funds to subsidize expanded services for patients with chronic conditions, as well as the cost of health clinics for people with disabilities.

"We would have to eliminate those programs that we've taken decades to create, and we would have to lay off employees," Evergreen Health CEO Raymond Ganoe said, according to the report. "Patients would suffer and lives could be lost. It's a huge deal."

The change is expected to usher in a $250 million funding loss statewide, and hospitals across New York are predicting losses of $240 million. 

Buffalo-based Neighborhood Health Center, a federally qualified health center, projects a $3.6 million loss — nearly 10 percent of its $40 million budget, the report said. Programs expected to take a hit include the behavioral health department, substance use disorder program, counseling for pregnant patients and the agency's dental program, which are all funded by excess 340B funds.

New York has said it is working on a way to compensate providers for the lost savings, but the state hasn't yet disclosed how that will happen, the report said.

"California has done this and we've watched closely," Neighborhood Health Center CEO Joanne Haefner said, according to the report. "Theirs went into effect a year and a half ago, and not one health center has been reimbursed any money yet."

Critics of the 340B program say commercial pharmacies and pharmacy benefits management companies who contract with smaller providers are also pocketing excess revenue from the program's savings, the report said. The big pharma lobby has also opposed the program, which reduces major pharmaceutical companies' profits.

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