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340B Conference Sheds Light on Program Changes, Agency Reorganization

Donna Young

President George W. Bush proposed a budget cut of $765 million for fiscal year 2004 for the Health Resources and Services Administration (HRSA), the agency that provides health resources for medically underserved populations, and has shifted many of the agency’s resources to meet his initiative of expanding community health centers.

The administration proposed increases for several other agencies, including the departments of Defense (4.2% increase) and Homeland Security (7.4% increase).

“The President has asked us to do more with less as a practical matter,” said Dennis Williams, HRSA’s deputy administrator, speaking at the 7th Annual 340B Coalition Conference on July 14 in Washington, D.C.

Department of Health and Human Services (HHS) Secretary Tommy G. Thompson has also “put a great deal of emphasis on management improvement and higher productivity,” he added.

HRSA has been undergoing a major reorganization as part of the Bush administration’s plan to expand the number of community health centers, Williams said.

Soon after taking office in 2001, Bush announced a five-year initiative to create 1200 new and expanded health centers that will serve an additional 6 million patients annually by 2006, he said.

As part of HRSA’s restructuring, the 340B drug-pricing program has moved to a new division within the Bureau of Primary Health Care (BPHC) called the Division of Health Center Development.

“The rapid expansion of the health center network presents an enormous management challenge for [BPHC] and for HRSA as a whole,” Williams said. “To manage the challenge effectively we have adopted a new management structure for [BPHC] that will improve our ability to meet the ambitious goal set for us by the President and Secretary Thompson. These changes will help the bureau concentrate its resources more directly on the essential elements of the President’s health center initiative, which are to create new sites and expand existing centers, improve management capabilities, and strengthen the quality of services.”

The Office of Pharmacy Affairs, which administers the 340B program, has been renamed the Pharmacy Services and Assistance Branch (PSAB) and has had its staff cut from 11 employees to 6, said Jimmy Mitchell, PSAB branch chief.

Mitchell said some of his employees were “reassigned to other areas of the government.”

Even though his division has undergone a name change and staff downsizing, Mitchell said, PSAB’s mission to promote access to comprehensive pharmacy services, develop pharmacy services programs, and act as a resource for the pharmacy profession has not changed.

“With the name change and the organizational structure change we are very pleased that our mission and our function has not changed. In fact it has been reinforced,” he said.

But conference attendee Marcus Farbstein, manager of government accounts for Genentech Inc., a biotechnology company, questioned whether the President’s initiative to expand health centers has left PSAB short of funding and staff.

Williams responded that “Jimmy [Mitchell] has an open line to me and if he needs help we will do our best to get him the help he needs. This is an important program and we will support it, but we are not going to be getting more resources, and so it is up to us as managers to try to do the best we can with what we have.”

Congress created the 340B program in 1992 to provide certain hospitals and federally funded grantees access to low prices on pharmaceutical products.

As of June 2003, Mitchell said, more than 10,300 covered entities—facilities and programs eligible to purchase discounted drugs through the 340B program—were participating in the program, a 12% increase from last year, he said.

Covered entities include disproportionate share hospitals owned by or under contract with state or local governments and 11 categories of facilities or programs funded by HRSA, including federally qualified health centers, AIDS drug assistance programs, hemophilia treatment centers, and family planning clinics.

Daniel M. Ashby, pharmacy director for Johns Hopkins Hospital in Baltimore, Maryland, and president of the American Society of Health-System Pharmacists (ASHP), speaking at the conference, said his hospital saved $4.6 million during its first year participating in the 340B program.

“It helped put a dent in the $77 million of indigent care we provide,” he said.

Many hospitals that are eligible for 340B discounts are not enrolling in the program, Ashby said, adding that other hospitals “don’t have a clue what 340B is about.”

“One action by ASHP has been to support aggressively the 340B program with the idea of increasing participation and expanding utilization for inpatients,” he said.

One of ASHP’s five leadership planks, Ashby noted, is to ensure the affordability and accessibility of pharmaceutical products for patients.

An important change that Mitchell said would help more disproportionate share hospitals participate in the 340B program is the revamping of its prime vendor system.

AmeriSource Bergen has been the program’s prime vendor for more than four years and has negotiated prices of drug products with pharmaceutical manufacturers.

On May 27, HHS agreed to let the company subcontract price negotiation services to HealthCare Purchasing Partners International, a group purchasing organization with the same governing board as Novation.

“AmeriSource Bergen had done a commendable job in negotiating subceiling prices in generics, some 2600 of them,” Mitchell said. “But we had not been able to negotiate subceiling prices on brand-name drugs. With the increased dollar volume and the participation of a large number of [disproportionate share] hospitals, we think that a number of drug companies will want to lower their prices. We think that this action will add significant value to participating entities.”

As part of PSAB’s transformation, it has shifted its technical assistance and pharmacy advice to the newly created Pharmacy Services Support Centers (PSSC), a contract program led by the American Pharmacists Association.

HHS announced the $993,392 contract in October 2002.

Diane Goyette, PSSC senior director, said the support center is an extension of PSAB.

Through the contract, Goyette said, the pharmacy profession has more opportunity to be involved in the 340B program.

Other pharmacy organizations, including ASHP and the American Association of Colleges of Pharmacy, will be involved in various PSSC activities, she noted.

The pharmacy organizations, Williams said, will “ensure the new center is equipped to provide the latest information on pharmacy practice.”

PSAB, he added, is training a support center employee, Jenna Williams, PSSC communications manager, to handle routine inquiries about the 340B program and other PSAB activities.