Magazine article Drug Topics

Indigent Drug Program, Section 340B, Helps More Than the Poor

Magazine article Drug Topics

Indigent Drug Program, Section 340B, Helps More Than the Poor

Article excerpt

HOSPITAL PRACTICE In Beloit, Wis., a community health clinic is paying as little as 10 cents on the dollar for drugs dispensed by community pharmacist Jerry Sveum. In Chapel Hill, N.C., the University of North Carolina Hospital & Clinics is saving $2.5 million annually on outpatient drug purchases. Both are reaping the rewards of a federal program called 340B.

"For most of my career, I didn't appreciate what 340B could do for a disproportionate-share hospital," said UNC director of pharmacy services Jim McAllister. "Then I moved to one. We couldn't survive without that program." Purchases made through Section 340B of the Veterans Health Care Act of 1992 have cut UNC's outpatient pharmacy losses from $9 million annually to $6.5 million, he said. That comes on top of an estimated $1 million savings from pharmaceutical manufacturer patient-assistance programs that provide free drugs to some patients. He predicted his outpatient savings will soar once the hospital creates its own pharmacy benefit network to dispense 340B drugs to UNC patients through community pharmacies statewide. He hopes to begin a demonstration project in 2002.

Sveum already dispenses 340B products under contract to a community health clinic in Beloit. The clinic provides full medical services and gets heavily discounted 340B prices on its entire list of formulary products. But instead of running its own outpatient pharmacy, the clinic contracts pharmacy services out to Sveum. His Grand Avenue Pharmacy collects a $4.99 dispensing fee on every clinic script. "I order the drugs through my own wholesaler," he said, "but the bill goes to the health clinic. It doesn't have to pay the over-- head associated with running a pharmacy, I don't have to invest in additional inventory, and patients get their scripts filled. It's a smooth deal for everyone."

The deal dates back to 1992. Sec. 340B requires drugmakers participating in Medicaid programs to offer separate discounts to certain government-- supported healthcare facilities, said Bill von Oehsen, general counsel of the Public Hospital Pharmacy Coalition in Washington, D.C. These "covered entities" spend about $1.7 billion annually on 340B drug purchases, he added. Discounts under 3408 average 54% of AWP, and the average hospital saves $2 million annually on outpatient drug purchases.

A group of about 130 public hospitals account for half of the 340B volume, according to von Oehsen, but almost any publicly supported hospital, health system, or clinic can qualify. …

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