Drug pricing program changes worry West Virginia clinic

Using a federal drug discount program, Cabin Creek Health Systems offers their uninsured patients income-based prices. It writes off some or all of their prescription costs. 

The 340B drug pricing program requires pharmaceutical companies that are covered under Medicaid and Medicare to offer discounts to healthcare organizations like Cabin Creek Health Systems, which is for low income and uninsured patients, allowing them to stretch limited resources to care for patients. 

“A great deal of our medications that we offer, we’re able to give to our patients for $5 or $6,” said Angela Stone, the health system’s director of pharmacy. “And if they can’t afford that, this affords us to be able to say, ‘We can write this off for you. We’re not going to let you go without your medication.’”

Beginning next year, though, Trump administration changes to the federal program will increase the purchasing and administrative costs for Cabin Creek Health Systems and other eligible clinics, which will have to pay up front for the drugs and seek rebates from drug manufacturers. 

The changes — part of a pilot program set to begin Jan. 1 — are coming at a time when thousands of West Virginians and millions across the country are expected to lose their healthcare coverage. 

For Cabin Creek Health Systems, a drug that cost 30 cents this year could cost them $1,500 to $5,000 to pay for upfront under the 340B rebate model, Stone said.

“Our purchasing costs could go from $100,000 to three quarters of a million dollars, and that’s just for the drugs that are affected by this rebate program, where we won’t get our discount upfront,” she said. “We will have to seek the discount from the manufacturer for every prescription that we dispense.” 

Having a rebate model for the program will require the pharmacy staff to spend time applying for rebates, without a clear timeline on when they’ll get the money paid back. 

“I would say that it could be someone’s full time job to keep up with it,” Stone said. 

According to the Health Resources and Services Administration, which oversees the program, the 340B Program has grown substantially in size and complexity over the last 15 years. The rebate pilot program is meant to improve transparency and program integrity, the agency said.

“Unlike the current upfront discount model, which provides limited visibility into individual 340B transactions, a rebate model requires claims-level identification of each transaction, allowing verification to occur before a rebate payment is issued,” HRSA said on its website about the program changes. “This approach helps address compliance concerns proactively, rather than relying primarily on retrospective reviews, audits and dispute resolution processes. 

“It also supports compliance with statutory non-duplication requirements under the Medicare Drug Price Negotiation Program,” the agency said. “The claims-level data is also expected to support better-informed oversight and long-term stewardship of the program.”

At least 33,000 West Virginians will be affected by new work requirements going into effect Jan. 1, according to an estimate by the Department of Human Services. The work requirements are a part of Republicans’ One Big Beautiful Act, which Trump signed into law last year. 

Healthcare analysts and insurance officials predict that people — including those who are eligible – will lose their healthcare coverage as they struggle to keep up with paperwork associated with the work requirements.

Amber Crist, chief operating officer for Cabin Creek Health Systems, said the 340B changes may mean some patients will be prescribed alternative medications other than the ones they need or that will work best for them. 

“It’ll just make healthcare that is already hard in the state increasingly more difficult,” Crist said. 

About a third of Cabin Creek’s patients are covered by Medicaid. Crist said it’s difficult to predict how many of them will still be enrolled in Medicaid in the coming months. 

“Coupled with what we’re going to experience with the 340B rebate model, it just makes projecting your budget increasingly difficult,” Crist said. 

Rebate model program challenged in court

The American Hospital Association and the Maine Hospital Association filed a lawsuit Oct. 9 against the Department of Health and Human Services over changes to the drug pricing program. The organization alleges that changes to the program will lead to $1 billion in increased annual administrative costs for hospitals that are already-strapped.

Tony Gregory, interim director of the West Virginia Hospital Association, said the 340B program is especially important in places like West Virginia, where hospitals face significant financial challenges and patients may have limited healthcare options.

The program is supported through discounts from drug manufacturers, so no direct state or federal tax dollars go into it, Gregory said. 

“(The program) helps hospitals maintain essential healthcare services and support their community,” Gregory said. “The program has been an important resource for West Virginia hospitals for a long time. It’s helped eligible hospitals stretch those limited resources, and in turn, it’s helped us provide care to vulnerable patients and communities.”

Matt Walker, a lobbyist who represents federally qualified health centers in West Virginia, said if the 340B rebate model works flawlessly, health centers will be delayed in saving money on the drugs. At the rebate model’s worst, companies could deny rebates to health care organizations.

“If you’re asking me personally, I think that hospitals and health centers will lose billions of dollars statewide as a result of this change, at least,” Walker said. “And they will certainly be delayed in collecting their rebate dollars, which has a negative impact on them because they can’t put those dollars to good use on the programs that they’re supposed to subsidize when they don’t have the dollars yet.”

Pending legislation would address drug pricing program, delay changes

Sen. Shelley Moore Capito, R-W.Va., is one of six members of Congress who are sponsoring the Sustain 340B, a bill that would reform the program while keeping the discounts at the point of sale. The members make up the Senate’s 340B Bipartisan Working Group. 

“We have received invaluable input from stakeholders throughout our process, and the legislation we are introducing reflects that feedback by aiming to provide greater stability, clarity, and transparency in the 340B program,” the group wrote in a statement in August. 

“The SUSTAIN 340B Act makes comprehensive reforms to the program while preserving its critical benefits that support eligible healthcare providers and the patients they serve throughout the country. By continuing to work together in bipartisan fashion, we are committed to strengthening the 340B program and helping make certain it remains accessible to serve patients and communities for years to come.”

The bill is pending in the Senate Committee on Health, Education, Labor and Pensions. 

Other legislation would delay the start of 340B becoming a rebate program. 

Both the Senate and the House of Representatives are in recess until after the midterm elections. 

Crist, with Cabin Creek Health Systems, said her staff is starting to come up with ideas about how to deal with next year’s budget with a lot of unknowns. The clinic may open a line of credit, she said. 

“Our main goal is to keep all of our doors open and keep all of our staff employed, and continue to take good quality care of patients,” she said. “It’s just requiring us to kind of think outside the box a little bit, the best way to continue to do that.”