Health centers urge Massachusetts to protect 340B program; critics call for transparency reforms

BOSTON — Leaders of Massachusetts community health centers urged the Joint Committee on Financial Services on March 1 to pass House Bill 1107 and Senate Bill 819 to stop manufacturers and pharmacy benefit managers (PBMs) from undermining the federal 340B drug discount program that health centers use to fund services.

"The 340B program is a vital federal policy that allows eligible safety-net providers to stretch scarce resources and invest these savings directly into care," said Christina Severn, president and CEO of Community Care Cooperative. She testified that 340B savings are not patient discounts but a sustainability mechanism that supports primary care, behavioral health and other services at federally qualified health centers (FQHCs).

Supporters said manufacturers have begun restricting shipments to contract pharmacies and PBMs have imposed discriminatory contracting terms that reduce the net savings health centers rely on. "This legislation represents a no-cost solution that will restore millions of dollars in lost savings to community health centers across Massachusetts," said Amy Benarier, executive director of the Fenway Institute at Fenway Health.

The Massachusetts League of Community Health Centers reported survey findings to the committee showing financial strain: 78 percent of surveyed member centers had an operating deficit and 83 percent reported at least one wait list for primary, behavioral or dental services. Michael Curry, president and CEO of the Massachusetts League of Community Health Centers, said health centers now represent about 8 percent of 340B spend while they depend on program savings to sustain care in high-need communities.

Several community health center executives gave specific examples of how 340B revenue is used. Ruby Pazzanetti, chief operating officer of the Edward M. Kennedy Community Health Center, said her center uses roughly $3,000,000 in annual 340B savings to pay for technology, pharmacies, and interpreter services. Brenda Rodriguez, CEO of Lynn Community Health Center, said 340B savings funded care coordination, medication delivery, dental care and transportation services for complex patients.

Not all testimony supported a straight legislative fix. William Smith, a public policy analyst at the Pioneer Institute, and witnesses from the Community Liver Alliance warned the committee that large hospitals and some contract pharmacies may be profiting from 340B without demonstrable community benefit. Smith urged more transparency: "If we knew exactly what hospitals were taking in from 340B and where they were spending it, we would have some idea who's serving their communities well and who is not." Clayton Ruley of the Community Liver Alliance recommended mandatory state-level reporting similar to reporting frameworks adopted in states such as North Carolina and Minnesota.

Pharmaceutical industry representatives also opposed parts of the bills. Rachel Caudle Latham, senior director for state policy for a national biopharmaceutical trade group, told the committee that mandating 340B pricing at all contract pharmacies and prohibiting certain claim modifiers could entrench current practices and raise costs for employers and public plans. She cited national growth figures and warned of unintended fiscal impacts on public purchasers.

Committee members pressed witnesses on whether covered entities already submit federal reports and what additional state reporting would require. Health center witnesses said many FQHCs already report federally and offered to rely on existing reporting rather than add new administrative burdens.

The committee did not vote on any bill at the hearing. Supporters asked the committee to report H.1107 and S.819 favorably; opponents asked for a slower approach that begins with mandatory transparency and accountability reporting before expanding protections.

Ending: Advocates on both sides asked legislators to act — supporters to restore immediate revenue to struggling health centers, and critics to adopt state-level reporting measures before locking in statutory protections. The committee will consider the testimony as it reviews several related bills.