Protecting Federally Qualified Health Centers Amid Drugstore Closures And Threats To 340B
In January 2024, a Walgreens location in Roxbury, Massachusetts, a predominantly Black and Latinx neighborhood in Boston, closed despite local grassroots activism and congressional support to keep it open. The shuttered store follows a series of Walgreens closures in the Roxbury, Mattapan, and Hyde Park neighborhoods of Boston.
This is not an isolated event. The largest drugstore chain corporations in the United States are closing thousands of stores nationally—creating pharmacy deserts and leaving patients and health care systems inadequately equipped to manage care. By the end of 2024, CVS plans to close 900 stores, including pharmacies within Target stores, and Walgreens plans to close 150 stores. Since Rite Aid’s bankruptcy last October, more than 200 stores in the US have shut down. The neighborhoods experiencing the brunt of these closures are disproportionately communities that are rural, have large publicly insured populations, or are predominantly Black and/or Latinx—communities with high rates of chronic, too often debilitating, illnesses that require convenient and timely access to medications and medical supplies.
Recent data show that residents from medically underserved areas (MUAs), which are census tracts with a shortage of primary health care services and high poverty rates, must travel almost twice as far to access pharmacies than residents from non-MUAs, and this disparity in travel distances widens with pharmacy closures. Not only do pharmacy closures increase transportation burdens on the patient, but they can also contribute to medication shortages, increase costs for patients, and interfere with medication adherence. Overall, limiting access to pharmacies exacerbates health inequities along the lines of race and ethnicity, rural geography, disability, and other aspects of social identity.
Federally qualified health centers (FQHCs) have provided solutions to the increasing need for accessible and affordable medications amid drugstore chain store closures. FQHCs have long offered a range of services beyond primary health care, including dental care, eye care, behavioral health, social services, and lab services. Many have also added “in-house” pharmacies to create true one-stop-shop centers for their patients’ health-related needs. This has been critical in areas where pharmacy chains have pulled out, filling the gap to address community needs. Essential to this expansion is the 340B Drug Pricing Program, a federal and state program that requires pharmaceutical manufacturers to provide FQHCs with medications at a lower price, allowing FQHCs to reinvest savings into expanding access to essential health services. Now, FQHCs face uncertainty as the 340B program encounters challenges to the ways in which health care entities can partner with pharmacies to provide services.
340B’s Impact On Federally Qualified Health Centers
Enacted in 1992, the 340B Drug Pricing Program has been essential to increasing pharmacy access and services for many patients, especially those who receive care from FQHCs. The federal 340B statute requires drugmakers participating in Medicaid to sell outpatient medications at a discounted price to health care organizations that care for many uninsured and low-income patients, such as public hospitals, community health centers, and nonprofit disproportionate-share hospitals (covered entities). Health centers use these savings to increase access to affordable medications and comprehensive services, including those that are underreimbursed or not reimbursable, such as translation services or outreach done by community health workers. The National Association of Community Health Centers (NACHC) reported that 90 percent of their survey respondents indicate that the 340B program has led to improved medication adherence, clinical outcomes, and access to care. A third of respondents to the NACHC survey estimate that more than half of their health center’s patients would lose access to necessary medication without 340B program discounts.
Several important impacts of the 340B program are worth noting. Savings from 340B have enabled FQHCs to extend their sliding-scale discounts for medications to their patients and have also supported funding for health center operations and services. FQHCs are required by their federal governing statutes to reinvest all 340B program revenue into the operations and services they provide. Revenue from the 340B program has been used to increase access to health care services for low-income and rural patients, including care coordination, behavioral health and substance use disorder treatment, dental services, and programming to address social drivers of health. Funds also subsidize necessary non-revenue generating or lowly reimbursed services and staff salaries that maintain and expand access to care.
Protecting Community Health Centers From 340B Contract Pharmacy Restrictions
Unfortunately, proposed restrictions on the number of pharmacies that can partner with 340B-covered entities is an emerging challenge to improving pharmacy access. When FQHCs do not have an in-house pharmacy or when their patient base is spread across a wider geographic area, they typically contract with multiple pharmacies in various locations to provide the most convenience to their patients. Patients can then choose which pharmacy to pick up their medications.
Restrictions on collaborations with contract pharmacies have evolved over time, reflecting policy responses to concerns from drugmakers on profit margins on 340B-discounted drugs. In 1996, 340B-covered entities could use one contract pharmacy each if they did not have an in-house pharmacy. In 2010, the Department of Health and Human Services removed the limit, allowing covered entities to use an unlimited number of contract pharmacies, enabling FQHCs to offer multiple locations where patients can pick up medication at their convenience. However, beginning in 2020, some drug manufacturers have unilaterally reinterpreted federal law and refused shipment of 340B drugs to more than one contract pharmacy per covered entity. This has significantly reduced the savings health centers rely on to provide comprehensive services to their patients and limits the number of pharmacies from which patients can access affordable medications.
Promising Legislation And The Way Forward
Legislation surrounding 340B is an active area of health policy. States have recently proposed or passed legislation to require manufacturers to ship 340B drugs to an unlimited number of contract pharmacies. On June 6, 2024, Minnesota joined Arkansas, Louisiana, West Virginia, Mississippi, Kansas, and Maryland as the first seven states to pass laws protecting 340B contract pharmacy access. Similar bills have cleared a legislative chamber in three other states, including Massachusetts, and have been introduced in 16 states. At the federal level, there are currently several reform efforts at play including the SUSTAIN 340B Act, a discussion draft developed by a bipartisan group composed of six senators to be introduced later this year. There are two other pieces of reform legislation that have been introduced to Congress: the 340B ACCESS Act and the 340B PATIENTS Act.
The 340B contract pharmacy restrictions from drug makers combined with the market forces driving the closure of drugstore chain sites are impacting patients’ ability to access affordable medication, leaving many vulnerable to the pitfalls of pharmacy deserts. Ameliorating 340B policies to protect options that FQHCs have for pharmacy access is a way to continue providing accessible and affordable medications to patients.
