State Delays Changes to 340B Drug Discount Program

Housing Works' South Slope thrift shop in Brooklyn.
Housing Works’ South Slope thrift shop in Brooklyn.
Matt Tracy

Local healthcare providers and non-profits are breathing a collective sigh of relief after the state agreed to delay plans to overhaul the federal 340B drug discount program, which requires drugmakers to give medication to certain providers at discounted rates. 

Advocates long warned that changes to the program would have wreaked havoc on vulnerable populations — including individuals living with HIV/AIDS as well as homeless folks. Organizations impacted by the program include community health non-profits, homeless shelter providers, and safety net hospitals, which offer services to individuals regardless of ability to pay.

Under the 340B program, pharmaceutical companies participating in Medicaid sell discounted drugs to managed care providers, who are then able to save money and repurpose those funds toward other services, including statewide vaccinations efforts, COVID-19 outreach, and education. A proposed 340B carve-out last year drew stinging criticism from advocates who stressed that the changes would have stripped savings from providers and reallocated them to the state as part of a fee-for-service model. 

The state budget passed earlier this month included an agreement to push the looming 340B “carve-out” to at least April 1, 2023.

Harlem United CEO Jacquelyn Kilmer.Harlem United

“The delay means that we will continue to have access to the $1.5 million-$2 million in annual savings that we receive from the federal 340B drug discount program,” said Jacquelyn Kilmer, the CEO of Harlem United, which offers housing, healthcare, testing, vocational services, and other services to more than 10,000 clients per year. “This money allows us to provide critically necessary outreach and transportation services to the communities we serve to get them into care and retain them in care.”

Kilmer said the delay also gives Harlem United more time to work towards a more robust deal with the state.

“We advocated for — and will continue to advocate for — a full repeal of the carve-out,” Kilmer said. “This two-year delay gives us the time to work together in partnership with the Legislature, the governor’s office, and the State Department of Health to achieve the policy objectives that the carve-out was intended to address without decimating the safety net system that is so critical to address the health and well-being of New York’s most vulnerable communities.”

Kimberleigh J. Smith, the senior director for community health planning and policy at Callen-Lorde Community Health Center, applauded the budget’s outcome for patients and employees.

“By protecting 340B revenues, we are protecting life-saving health care services for thousands of our patients who trust us as a community-based health care provider,” Smith said in a written statement. “We are also protecting scores of critical health care jobs. The delay will allow us to refocus our efforts on delivering vaccines to our patients in greatest need, and to continue working towards ending the HIV/AIDS epidemic in New York State.”

Doug Wirth, the CEO of Amida Care, a private non-profit community health plan serving many queer New Yorkers, said this decision is critical in dismantling health disparities among low-income communities.

“Amida Care celebrates the two-year delay of the Medicaid pharmacy carve-out, which preserves our whole-person model of care,” Wirth said in a written statement. “The proposed reform would have harmed millions of New Yorkers by changing how they access their prescription drugs.”

Jaron Benjamin, the vice president for community mobilization at Housing Works, which serves New Yorkers living with HIV/AIDS and experiencing homelessness, said this funding is critical for providing “life-saving healthcare interventions” but is always in danger. 

“We know that in a few years, this will be revisited,” Benjamin told Gay City News. “We still got our work cut out for us.”

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