The National Association of Community Health Centers found that
community health centers save between fifteen and sixty percent on their
prescription drug costs by using the 340B Program. 66 In a 2011 report, the
National Association of Community Health Centers observed that the
“amount of savings per community health center depends on the volume and
type of drugs that are purchased” ( i.e., brand name versus generic). 67 Some
community health centers may have a relatively large number of insured
patients, whose insurance payments for prescription medication may be
significantly greater than the community health center’s purchase price,
thereby increasing the community health center’s savings. Community
health centers may use any 340B-created surplus in a variety of ways, such
as expanding their formulary, expanding current services and programs,
and/or offering new services. 68 Any 340B-generated surplus should be used
to advance the purposes of programs for which the community health center
received its federal grant.
Pharmaceutical manufacturers estimate they gave $1.0 billion worth of
340B discounts in 2005, while in 2010 the estimated discounts totaled $2.2
billion. 69 The industry projects 340B discounts will grow to $5.0 billion by
2016.70 The steep increase in discounts provided is largely attributed to the
increase in the number of participating covered entities (and dispensing
pharmacies). With costs rising, it is no surprise that pharmaceutical
companies have been increasingly vocal in pushing for 340B reform.
II. WHAT IS UNIQUE ABOUT COMMUNITY HEALTH CENTERS?
The Community Health Center program, authorized by Section 330 of the
Public Health Services Act in 1975, currently supports more than 1,300
community health centers that operate approximately 9,000 sites and serve
over 23 million patients nationwide. 71 Community health centers (per the
Social Security Act, “Federally qualified health centers” that are often
referred to as FQHCs) originated in the 1960s as a key part of the War on
Poverty. 72 Under the ACA and due to health reform measures, community
66. NAT’L ASS’N OF CMTY. HEALTH CTRS., UNDERSTANDING THE 340BPROGRAM: A
PRIMER FOR HEALTH CENTERS 4 (2011).
69. ALLIANCE FOR INTEGRITY & REFORM OF 340B, UNFULFILLED EXPECTATIONS: AN
ANALYSIS OF CHARITY CARE PROVIDED BY 340B HOSPITALS 9 (2014), http://340breform.org/
71. U.S.DE P’T OF HEALTH & HUMAN SERV., HEALTH CENTER FACT SHEET, http://
bphc.hrsa.gov/about/healthcenterfactsheet.pdf (last visited Nov. 8, 2015); see 42 U.S. C. §
254b (2010) (authorizing legislation).
72. Martha J. Bailey & Andrew Goodman-Bacon, The War on Poverty’s Experiment in
Public Medicine: Community Health Centers and the Mortality of Older Americans, 105 AM.