Labette Health administrators and hospital trustees are upset that five pharmaceutical companies have scaled back participation in a program that makes certain prescription drugs affordable for low-income and other vulnerable patients or will do so within a month.

The federal law that started the 340B program passed in 1992 when Bill Clinton was president helps eligible health care providers and safety net hospitals — those serving large numbers of uninsured or vulnerable patients — by making them eligible for discounted pharmaceuticals to increase patient access to medicine. The Health Resources and Services Administration, which administers the program for the U.S. Department of Health and Human Services, estimates these drug discounts at 25% to 50%, and these discounts help hospitals generate needed money.

Labette Health received a gross profit of about $4 million from the program and uses that money to improve health care delivery and access, according to Brian Williams, Labette Health CEO. Most of the savings realized by Labette Health from 340B comes from drugs used to treat diabetes and chronic obstructive pulmonary disease, he said.

The 340B program has grown nationally, which has raised the eyebrows of pharmaceutical executives. The number of hospitals participating have more than tripled since 2009, according to the Government Accountability Office, which has produced a number of reports over the years on the 340B program. In 2009, more than 800 hospitals participated. In 2019, that number grew to more than 2,500. The majority of participating hospitals are nongovernmental hospitals. One report said 1,690 hospitals, or 67%, of participating facilities as of Jan. 1, 2019, were nongovernmental hospitals. Labette Health is a county-owned hospital. In Kansas about 75 hospitals participate in 340B, according to the Kansas Hospital Association.

Hospitals may realize substantial savings through the program’s price discounts. They generate revenue by buying 340B drugs for eligible patients whose insurance reimbursement exceeds the price paid, the GAO reported.

Hospitals provide drugs, including 340B drugs, to patients through one or more methods. Hospitals may dispense them through in-house pharmacies or through contract pharmacy arrangements, through which they pay outside pharmacies to dispense drugs on their behalf. In addition, providers who work at hospitals may administer 340B drugs to patients during office visits, according to the GAO.

Labette Health has contracted with many pharmacies in Southeast Kansas as a way to improve access to these medications, Williams told trustees Thursday at their monthly meeting.

In recent weeks, five large pharmaceutical companies, including Eli Lilly and AstraZeneca, have scaled back discounting or will stop discounting drugs offered through 340B, an action that may impact the nation’s poor and vulnerable patients that benefit from the discount drugs, Williams said. He called the action predatory and chided HHS Secretary Alex Azar, a former president of an Eli Lilly affiliate, for failing to stop the practice.

Williams pointed to Chetopa as one community that could be impacted if the changes stand. In Chetopa, 38% of the population is considered living below the poverty line.

“So without the 340B resources, it’s pretty hard to keep clinics in some of these smaller communities that are not very densely populated,” Williams said, adding that transportation to the doctor would be an issue if citizens had to travel to another community to get needed medical care or fill prescriptions.

340B money has helped establish or keep clinics in smaller towns.

Williams said he has emailed and spoken to members of Congress, and the KHA is involved.

He said the hospital could suggest to providers that they switch insulin drugs from Eli Lilly’s options to a company that supports the 340B program. 

“It would be wrong to do that. It’s just as wrong of them to basically say with a gun to the hospital’s heads, ‘This is what you’re going to do,’” Williams said.

“This is one more example of what’s wrong with health care. You have all these intermediaries between our providers and the patient interfering with care,” Williams told trustees.

He said the easiest fix for expensive national health care is to remove the for-profit objective. He said he spoke with Tracy Gilmore, a pharmacist for the hospital and Bowen Pharmacy who oversees the Labette Health 340B program with hospital pharmacy director Ashley Harlow, about the matter. She wondered at what point human life is more important than the stock market, Williams said.

Williams said if he could he would purchase the needed drugs in Mexico. He said he knows he cannot legally do that so that leaves the hospital and providers to figure out where to get the diabetic and COPD medicines and other medication used in 340B and offered by the five pharmaceutical companies.

Trustees Wayne Gilmore and Dr. Robert Gibbs hoped organizations such as KHA could get data on how this change will impact hospitals and patients so the U.S. Senate and U.S. House of Representatives will know and could possibly force a change.

Williams said the change will hurt federally qualified health centers, too, such as the Community Health Center of Southeast Kansas that operates a clinic across from Labette Health. 

He said Labette Health will not turn its back on patients and pharmacies, even if it means losing 340B revenue in the short term.

“We’re going to figure out how to get the drugs,” he said.

Neosho Memorial Regional Medical Center CEO Dennis Franks said the changes in 340B so far are minor and only impact a few drugs. Franks thinks HRSA may deem the changes by the drug companies as inappropriate. 

“However, if this trend is allowed to continue, the impact could be substantial for many U.S. hospitals,” Franks said in email correspondence.

Cindy Samuelson, senior vice president of member and public relations for the KHA, said the organization is against efforts to scale back or reduce 340B program benefits. She said about 75 community hospitals in Kansas are registered to participate in the federal program.

A member survey showed the importance of the 340B program in Kansas. 

“Maintaining a compliant program that meets the rigorous regulatory demands is an extremely important and challenging aspect for hospitals. Educational opportunities exist to continue to improve how safety-net hospitals serve vulnerable communities,” Samuelson said.

The KHA has written to the Kansas congressional delegation on the matter.


In other matters, trustees:

— Heard that Labette Health donated $10,000 to develop the pocket park on Main Street in Parsons. Fundraising was about $10,000 short of the goal and Williams told trustees that the hospital has been blessed by the community and this is another way to give back.

— Heard that Williams conducted open forums with hospital employees to answer questions and provide information. Some questions came up about the money to be spent on the hospital renovation. Williams said he told employees money for capital improvements is different from operational expenses such as salaries. The capital improvements will pay dividends over decades and benefit the community.

— Heard from Christina Sykes, human resources director, that the Parsons Recreation Commission and Wesley United Methodist Church have offered space to children of hospital staff in case schools get closed down temporarily because of exposure to COVID-19. These buildings would be used to set up virtual learning environments so students’ parents could continue to work in their health care jobs.

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