The View From the Nation’s Capital

Guest Contributor: Ted Slafsky
April 15, 2020

COVID-19’s impact on the 340B community: every cloud has a silver lining

As the nation faces its greatest threat since World War Ⅱ, each day we are confronted with more grim news. Despite impressive progress in flattening the curve, the death toll and the number of coronavirus-infected patients continues to rise. While the country has rightly come together to take on this historic task, we face a dramatic downturn in the economy that will be particularly challenging for healthcare providers that treat high numbers of low-income, uninsured and underinsured patients. The next few years will be a period of painful learnings — not only for those in the healthcare industry but for the nation as a whole. But as someone who observes COVID-19 through the lens of a long-time healthcare advocate, I believe the current crisis will ultimately have some positive long-term benefits for 340B providers and patients.

The bad news

First the bad news. As I write this column, a news flash crosses my screen with the latest unemployment figures: another 6.6 million Americans have filed for unemployment. Economists project that the unemployment rate is now at 13%, the highest since the Great Depression. A recent analysis by Health Management Associates estimates:

  • The number of people receiving health insurance coverage from an employer could decline by 12 to 35 million, including both workers and family members.
  •  Medicaid enrollment could increase by 11 to 23 million across all states over the next several months.
  •  Uninsured numbers could increase to 40 million, with bigger impacts in non-expansion states.
  •  Enrollment in the ACA insurance marketplaces are expected to remain flat at roughly 11 million as result of new entrants, balanced by exits of current enrollees who will move to Medicaid.

With the steep climb in uninsured and Medicaid patients, federal and state governments will face unprecedented budget challenges. In an effort to balance budgets, state policymakers, in particular, will look to make cuts to 340B providers. At a time when Gov. Cuomo (D-NY) has been working tirelessly to ensure his state’s healthcare providers have the equipment, protective gear and capacity to handle COVID-19, the governor also led the successful effort to pass state legislation that will transfer the Medicaid managed care pharmacy benefit to Medicaid fee for service. As a result of the new law, enacted April 3, reimbursement for 340B-purchased drugs will be based on actual acquisition cost.

Providers warn that the change will deprive them of millions of dollars in 340B revenue they can ill afford to lose, especially in light of the pandemic’s financial impact. As of now, Gov. Newsom (D-CA) is moving forward with a similar plan this January.

Many reasons for hope

Despite the difficult road ahead, I am very optimistic about our long-term future. Our nation and the world have discovered a newfound appreciation of healthcare providers and the healthcare industry that I expect to leave a lasting impression. Not until September 11, 2001, did we fully understand and appreciate the work of our first responders and military personnel. Two decades later, these heroes continue to hold a well-deserved, elevated status.

Now New York firefighters are lining up outside of hospitals at 7:00 p.m. each evening to cheer on the staff as they go through their shift change. Every day, New Yorkers throughout the city join them, and the #ClapBecauseWeCare ritual has gone viral throughout the world.

I am also hopeful that the country will now recognize and take action to address the disparities in our healthcare system. We are now acutely aware of the disproportionate toll COVID-19 is taking on the African-American and Hispanic populations. And as we know, 340B providers take care of a significantly higher number of patients of color as well as disabled individuals.

Despite budget shortfalls, I expect a paradigm shift when it comes to investments in the healthcare safety net and the healthcare industry as a whole. I anticipate that this funding will come not only from the government but also the private sector, as businesses realize that their financial health is dependent on a healthy community. I envision a new era focused on disease prevention, education, research and development. I also anticipate that young people will be more motivated than ever to devote their careers to science and medicine. As a result, we will see remarkable innovation that will truly benefit society.

We have also learned how important the 340B program is to hospitals and other providers serving our most vulnerable patients. 340B was already a lifeline for healthcare providers and patients prior to the pandemic. Now, it is an essential tool that will be strengthened in the coming years. For that, we can all be grateful.


Other “View From the Nation’s Capital” Posts from Mr. Slafsky: 

Coronavirus Likely to Sideline 2020 Policy Changes for Prescription Pricing and 340B – March 2020
Four Key Takeaways from the 340B Coalition Annual Winter Conference – February 2020
Time to Step Up Your Efforts at the State Level – January 2020
Pro-340B Group Gains Momentum with Grassroots Tactics – December 2019
More States Embrace 340B Program as a Win-Win for Taxpayers, Patients and the General Public – November 2019

Ted Slafsky, a leading pharmaceutical policy thought leader, is Publisher & CEO of 340B Report, the first and only independent news service covering the federal 340B drug pricing program.  He is also Founder & Principal of Wexford Solutions, a Washington, D.C. based firm that provides government relations, communications, and business development services. You can follow Mr. Slafsky on Twitter at @tslafsky or reach him at [email protected] or (703) 517-1325.


About 340B Report:

340B Report is the only independent news service that provides breaking news and analysis about the federal 340B Drug Pricing Program. We follow all 340B program developments big and small—in federal government agencies, Congress, courts, the states, associations, the private sector, academia, and more.