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In 1992, Congress Enacted The 340B Drug Pricing Program, Requiring Pharma Companies Participating In Medicaid Program To Provide 20%-50% Discounts To Health Care Orgs That Serve A High Number Of Low-Income And Uninsured Patients; Program Allows Organizations To Stretch Limited Federal Resources To Expand Services And Reduce Costs To Patients 

In January 2018, The Centers For Medicare & Medicaid Services (CMS) Imposed A 28.5% Cut To Reimbursement For 340B Drugs; Schumer Launches Push To Reverse Cuts, Arguing They Could Force Hospitals To Lay Off Staff And Eliminate Critical Services 

Capital Region Hospitals Say This Program Allows Them To Provide Services Such As Mental Health Treatment, Maternal Health Care, Cancer Treatment And More; These Services Are At Risk If Cuts Are Not Reversed

Schumer To Feds: Cuts To 340B Program Will Devastate Capital Region Hospitals, You Must Immediately Reverse Course

Standing at the Albany Medical Center Hospital in Albany, U.S. Senator Charles E. Schumer today called on the Department of Health and Human Services (HHS) and Centers for Medicare & Medicaid Services (CMS) to reverse course and eliminate dramatic cuts to Upstate New York’s hospitals. Schumer explained that the 340B hospital program is critical, in that it gives hospitals who serve many low-income patients and constantly need to stretch their budgets prescription medicine at a reduced cost, better allowing them to provide care for their patients, as it alleviates some of the pressure on their bottom line. However, Schumer explained, earlier this year, a CMS rule cut the reimbursement 340B hospitals receive by 28.5%. Schumer said that these cuts to the 340B program could force cuts to critical care services such as cancer treatment, addiction treatment and prescription drug access. The program also allows hospitals to provide prescription drugs at reduced prices or free of charge to patients who have difficulty affording them. Therefore, Schumer called on HHS and CMS to reverse course and eliminate cuts to the 340B hospital program, to allow hospitals to best serve the most vulnerable patients and communities.

“The 340B hospital program has been a lifeline to hospitals across the Capital Region; including Albany Medical Center Hospital and Ellis Medicine. This critical program has given hospitals significant financial relief by decreasing the burden of the high cost of prescription medication, and it must be protected at all costs,” said Senator Schumer. “However, in January of this year, the feds slashed the 340B hospital program, which could lead to hospitals being stripped of their ability to provide critical services, and could even lead to the layoff of hospital staff. That’s why today I’m calling on HHS and CMS to reverse these cuts at once, to protect access to essential health care services for communities across Upstate New York.”

Schumer explained that due to the high cost of prescription medication, many hospitals that accept a high volume of low-income uninsured patients typically have very tight operating margins and any cuts could force them to reduce services and eliminate staff. So, in order to provide these hospitals with relief, Congress enacted the 340B Drug Pricing Program (Section 340B of the Public Health Service Act) in 1992, allowing eligible organizations to purchase prescription medications at a 20%-50% discount. Other types of organizations currently eligible for 340B include federally-qualified health centers, Ryan White AIDS clinics, homeless clinics, hemophilia treatment centers and more. Schumer explained that these discounts gave these hospitals and organizations the financial margins and ability to offer more critical care services and hire more staff.

However, Schumer detailed, on January 1, 2018, CMS imposed a major cut to the critical 340B hospital program. Under the rule, hospitals are now paid average sales price (ASP) minus 22.5% for drugs purchased under the 340B program and administered in the outpatient setting, whereas they had previously been paid ASP +6%, the standard formula for all other Medicare Part B drugs. This reimbursement change drastically reduces the difference between the cost of the product under 340B and the reimbursement level. Schumer said that it will result in cuts to critical services at the 340B hospitals, or layoffs of hospital staff – ultimately hurting the patients and communities those hospitals serve.

This October, Schumer received a letter from more than 700 hospitals, including 26 New York 340B hospitals, asking for his help in eliminating this cut to the 340B hospital program. Today, Schumer stood alongside 340B hospitals to say that he is answering the call and committed to fighting back against the 340B cuts. Schumer was joined by James Barba, President and CEO of Albany Medical Center; Paul Milton, President and CEO of Ellis Medicine; Hospital Association of New York State (HANYS) President Bea Grause, RN, JD; and Dr. Ferdinand Venditti, M.D., Executive Vice President for System Care Delivery and Hospital General Director of Albany Medical Center.

Schumer explained that five hospitals are categorized as 340B hospitals and stand to lose money across the Capital Region: Albany Medical Center Hospital, Columbia Memorial Hospital, Ellis Medicine, St. Mary’s Hospital and Nathan Littauer Hospital. Schumer said that Albany Medical Center Hospital expects to lose $11.5 million because of the 340B cuts over the next decade. Ellis Medicine will lose $23 million, Columbia Memorial will lose $1.6 million, St. Mary’s Hospital will lose $7.8 million and Nathan Littauer will lose $503,000 over the coming ten years.

In total, New York State 340B hospitals stand to lose $1,769,963,000 because of the cuts over the next decade.

Schumer said that Albany Medical Center, which stands to lose $11.5 million over the next decade because of the 340B cuts, uses savings from the program for medication for children in the cancer program at the Bernard & Millie Duker Children’s Hospital at Albany Medical Center For instance, the savings allow Albany Medical Center to support Child Life Specialists, who help children cope with and manage their illnesses. Additionally, Albany Medical Center also uses the 340B program to purchase drugs for patients in their outpatient infusion service. The drugs used in the outpatient infusion service can cost up to hundreds of thousands of dollars per year in certain cases, and the 340B program helps Albany Medical Center afford them. Schumer explained that these are the types of services that will be in jeopardy if the 340B cuts are not reversed.

"As the region's only academic medical center, which includes the region's only children's hospital and pediatric emergency department, and one of the busiest Trauma Center's in New York State, the 340B Drug Pricing Program is vital for many of the financially vulnerable patients Albany Med serves. This program helps our institution cover the gap between costly medication and low reimbursement rates -- which supports Albany Med's mission to provide the highest level of care to every patient who comes through our door,” said Ferdinand Venditti, M.D., Executive Vice President for System Care Delivery and Hospital General Director of Albany Medical Center.

“HANYS and its member hospitals and health systems applaud Senator Schumer for his leadership in protecting the 340B Drug Pricing program,” said Hospital Association of New York State (HANYS) President Bea Grause, RN, JD.  “This program provides New York’s hospitals and health systems the ability to offer affordable drugs and services to their most vulnerable patients.  This year alone, New York’s 340B hospitals have absorbed a staggering $160 million in cuts for certain 340B drugs, which will lead to painful choices at a time when hospitals can ill afford to absorb yet another attack on their Medicare reimbursement.  We look forward to continuing our strong partnership with Senator Schumer and working together to protect access to affordable care for all New Yorkers.”