Julietta Katherine Gill Shuffield, executive director of Patients Come First California, said April 10 that California’s rural hospital crisis should prompt closer scrutiny of the federal 340B drug pricing program.
“California’s rural hospitals are facing multiple, steep challenges providing patients with access to care. One key place to look is the federal 340B program. The 340B program’s lack of transparency has allowed it to be preyed upon by large players in the healthcare system, such as hospitals and big insurers. As the program ballooned, it became a flashpoint in the battle over rising drug costs and their impact on hospital budgets,” Shuffield said in an op-ed published in CalMatters.
“Without congressional oversight, this program will continue to fail the patients most in need. Rural Californians need this help now. Their health and lives depend on it,” she added.
The 340B Drug Pricing Program was created in 1992 to require drug manufacturers participating in Medicaid to sell outpatient drugs at discounted prices to eligible safety-net providers. Critical access hospitals are among the providers that qualify, making the program directly relevant to rural communities managing thin margins and high fixed costs, according to the Health Resources and Services Administration.
California’s 340B hospital network includes 3,514 contract pharmacy agreements, with 40% involving pharmacies located outside the state. Ronald Reagan UCLA Medical Center alone has 134 contract pharmacy agreements, with 40% outside California, according to data from 340B Reform.
Charity care levels at many California 340B hospitals remain limited even as program-related revenue grows. 340B Reform reports that about 79% of these hospitals provide below-average charity care while earning 3.6 times more in 340B-related profits than they spend on charity care. Stanford Health Care, for example, devotes about 0.2% of its operating costs to charity care.
More than 200 rural hospitals nationwide have fully or partially closed since 2005, and more than 400 others are at risk of closure, according to a Commonwealth Fund explainer. More than half are designated as critical access hospitals, a status often tied to maintaining emergency and specialty care access in rural areas.
Patients Come First describes itself as a national patient advocacy organization focused on barriers to access and delays in innovation with a network of state executive directors. Julie Gill Shuffield serves as California executive director and lives in rural Northern California where her experience has shaped her focus on resource challenges for underserved communities.
