PhRMA Reveals New Approach to Eliminate Discount Program

Pharmacy Practice in Focus: Health SystemsMay 2023
Volume 12
Issue 3

Health-system pharmacies should fight the well-orchestrated attempt to dismantle 340B drug pricing.

On March 9, 2023, the Pharmaceutical Research and Manufacturers of America (PhRMA) and the National Association of Community Health Centers (NACHC) released more details about the policy initiatives of a relatively new effort with a catchy acronym called the Alliance to Save America’s 340B Program (ASAP 340B).1

This is another step in a long series of efforts by PhRMA to systematically dismantle the 340B Drug Pricing Program, and it has convinced 9 other entities to join this alliance. The inclusion of NACHC in this alliance is most disappointing for health systems that participate in the 340B program. For many years, our community health centers have been important partners in providing care to underserved communities, and we have worked together closely to preserve the integrity of the 340B program, recognizing its vital role in caring for these communities. I suspect it is unlikely that local federally qualified health centers (FQHCs) represented by NACHC truly support the decision to align with PhRMA in a self-serving attempt to harm disproportionate share hospital (DSH)-covered entities.

Cash in piggy bank | Image credit: Siam -

Cash in piggy bank | Image credit: Siam -

Health-system pharmacy leaders should have seen this betrayal coming. More than 2 years ago, multiple PhRMA member companies (now 21) began restricting access to 340B purchases for contract pharmacies but for the most part have spared federal grantee organizations, including FQHCs. The conversation around the 340B program, including PhRMA talking points, began to introduce the “good actor” and “bad actor” implications when discussing grantees vs DSH-covered entities. Then 2 well-placed articles in prominent media outlets implied that DSH participants in the 340B program were abusing the system.

Of course, for those of us who understand the program, we found the articles 1-sided, reflecting a naïveté about the program that echoed many PhRMA talking points. On the surface, simplified arguments, such as accusing DSH-covered entities of not passing on drug discounts to patients, make perfect sense to the public and some journalists but are a disinformation campaign that skews the true intent of the federal 340B program. To have NACHC go public as an unlikely ally of PhRMA, pushing policy statements that will limit participation by DSH hospitals in the 340B program, seems like the next logical step in a well-orchestrated game of chess.

The policy document even uses the term “true safety net providers,” which the marketing professionals have determined is more impactful than the reference to “good actors.” Of course, the implication is that health systems that provide more unfunded care to underserved groups than NACHC members are not true safety net providers.

How long has this strategic agreement been in play for NACHC and PhRMA? Of course, it must be assumed that PhRMA is hoping to benefit from the strong advocacy and political successes that FQHCs and NACHC have demonstrated over the years. The AIDS Healthcare Foundation, the largest global AIDS organization, quickly condemned this alliance of NACHC with PhRMA, with its president, Michael Weinstein, suggesting that NACHC naïvely stepped into a trap set by PhRMA, although I doubt it was that innocent.

“[The] NACHC, selfishly, has thrown all nonprofit 340B providers, hospitals, and clinics under the bus. This is a betrayal by the community clinics that invites the fox into the henhouse,” Weinstein said. “We will fight this unholy alliance fiercely.”2 These are strong condemnations from an organization that has been a long-term supporter of FQHCs and their mission.

Commenting on all 10 points from the policy statement released by ASAP 340B is beyond the scope of this article, but the statement is well written and seems reasonable enough for those not well versed in the complexities of the 340B program. The first 2 points attempt to redefine the 340B program, stating that being a patient subsidy program should be its primary goal. This is not true and never has been. The 340B program is intended to provide resources to qualifying covered entities to extend care and services to underserved communities and patients and not directly underwrite individual patient expenses such as discounted drugs. One option that can be considered is the provision of discounted or free medications, but that is dependent on the local environment. Many underserved patients may already have financial support for prescription drugs through Medicaid or other programs. The sixth point proposes to redefine the qualifications for DSH organizations to participate in the 340B program, with the intent of significantly diminishing enrollment but with no changes for critical access hospitals, federal grantee organizations, and sole community hospitals. Other policy points argue to restrict contract pharmacy access for hospitals, tighten the patient definition for eligibility, and limit the role of third parties to assist covered entities in managing the program. These are all fully aligned with the talking points heard for years. The eighth point calls for a neutral clearinghouse for commercial, Medicaid, and Medicare claims to presumably strengthen program integrity, but more importantly to ensure PhRMA can avoid paying both 340B discounts and large rebates to pharmacy benefit managers (PBMs), or what the industry calls “duplicate discounts.” However, the statutory definition limits duplicate discounts to Medicaid claims. The implication is that there are widespread diversion and duplicate discounts that need greater oversight, which is not true. This policy statement is a self-serving desire by the pharmaceutical industry to gain access to data to better manage its business agreements with PBMs. Although the policy statements lack adequate detail and are not publicly translated into legislative language, a brief overview and analysis is provided by Joshua Free, PharmD, MBA, founder and president of Nelco Advisory, a consulting firm based in Portland, Oregon.3

Although it is unclear whether this strange alliance will be able to gain traction in Washington, DC, this well-orchestrated, stepwise approach attacking health system participation in a critical program should be aggressively repelled at every opportunity. Health system pharmacy leaders should engage their local FQHC colleagues and other grantee clinics to share their dissatisfaction with this betrayal of what has historically been a strong alliance fighting for preservation of a vital program. These local grassroots efforts can influence the national agenda and maybe convince the NACHC to reconsider its self-serving decision.

About the Editor

Curtis E. Haas, PharmD, FCCP, is director of pharmacy for the University of Rochester Medical Center in New York.


1. Principles for ensuring the 340B program benefits patients and t rue safety-net providers. Alliance to Save America’s 340B Program. Accessed April 11, 2023.

2. Kenslea G. Community health centers’ deal walks PhRMA fox into 340B henhouse. AIDS Healthcare Foundation. March 9, 2023. Accessed April 11, 2023.

3. Free J. Who’s trying to save 340B? Not the NACHC. Nelco Advisory. Updated March 13, 2023. Accessed April 11, 2023.

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