(The Center Square) — Lawmakers reconvene today to consider the governor’s vetoes and amendments, including a bill patroned by Sen. Louise Lucas, D-Portsmouth, aimed at improving low-income Virginians’ access to prescription drugs.
Though the bill overwhelmingly passed both chambers, Gov. Glenn Youngkin amended it and included a reenactment clause in his amendment — a provision requiring the bill also pass next year’s General Assembly to become law.
Senate Bill 119 concerns the federal 340B program, the second-largest government pharmaceutical program after Medicare Part D, according to the National Pharmaceutical Council. The program requires pharmaceutical companies to sell some of their drugs to participating health care facilities at heavily discounted rates but does not regulate what those facilities can charge patients or insurers for those same drugs. Founded to help certain health care clinics serving largely low-income populations, the intent of 340B was that those providers would – one way or another – pass those savings along to vulnerable patients.
Years later, the program has ballooned from about 1,000 “covered entities” – health care facilities qualifying for the 340B discount – to over 50,000, according to the National Institutes of Health. The program now constitutes about 7% of the total U.S. drug market, representing almost $54 billion in drug sales and more than 40% of U.S. hospitals. Investigative reporting by the New York Times and the Wall Street Journal has revealed instances of program abuse, where health care systems use the funds to improve clinics in wealthier areas while their 340B locations deteriorate.
SB 119 was written to help entities, the bill’s supporters argue, whose benefits through 340B have been an unfortunate casualty of the program’s rapid expansion and the pharmaceutical industry’s subsequent efforts to reign in the proliferation of discounts: Federally qualified health centers.
Michael Jackson, CFO of Virginia Community Healthcare Association, an advocacy group for Virginia’s federally qualified health centers, says they are some of the institutions the program designed to help at its inception. Until the Affordable Care Act of 2010, hospitals were not covered entities under 340B. Covered entities have extended the discounts to pharmacies they contract with, resulting in an 8,500% increase in contract pharmacy arrangements, according to an analysis by Berkeley Research Group.
As a result – and because there’s some ambiguity regarding contract pharmacies in the statute – some drug manufacturers began notifying hospitals that they would no longer be shipping 340B prescriptions to all contracted pharmacies. Some have said they will ship to only one contract pharmacy per covered entity. Eventually, they began to do the same for federally qualified health centers.
Jackson describes this as a sort of turf war between hospitals and pharmaceutical manufacturers.
“When they first started these restrictions, they were only restricting hospitals because…. They were utilizing the program in ways that may not have been intended,” Jackson told The Center Square. “Pharma originally exempted FQHCs from these restrictions. Over the last 24 months, they have imposed those same shipping restrictions on FQHCs as well.”
“When two elephants fight – hospitals and pharma – the grass gets trampled. And the FQHCs are that grass.”
Jackson underscored the hardship this can impose on patients, especially when one federally qualified health center might serve multiple counties.
“One contract pharmacy shipment for an FQHC that has a service area of 1,200 square miles, five counties and one city… that’s problematic,” Jackson said.
However, some think the bill wouldn’t do what it’s meant to do, much like the program as a whole, in some cases. Del. Philip Scott, R-Spotsylvania, was one of just five of his party to vote against the bill in March (the bill passed unanimously in the Senate).
“There is a real problem related to this bill but the bill doesn’t fix the problem; I am interested in passing a bill that actually fixes the problem. I foresaw problems that could come up down the road after discussing with colleagues and decided to vote no,” Scott told The Center Square in an email.
Based on his amendment, the governor shared some reservations about the program, delaying the enactment of the bill and instead authorizing a group of “relevant stakeholders,” including pharmaceutical manufacturers and FQHCs, that will “monitor the implementation of the 340B program,” and additionally, “study whether the current 340B Program includes a risk of Medicaid dollars going toward non-Medicaid eligible populations.”
The Pharmaceutical Research and Manufacturers of America also opposed the legislation, maintaining that any reforms to the federal program should ultimately come from the federal government.
“The federal 340B program is broken, with chain pharmacies and PBMs capturing money that is supposed to be used to lower costs for patients. This legislation makes matters worse, essentially endorsing this PBM and pharmacy profiteering at the expense of patients. We appreciate that the Virginia legislature has shown an interest in the 340B program, but the U.S. Congress needs to step in and refocus the program on patients as part of a broader set of improvements,” Stami Williams, a spokeswoman for the organization, told The Center Square in an email.
Legislators will vote on the governor’s amendments Wednesday.
