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Community Safety Net Providers Struggle to Maintain Access to Affordable Prescription Drugs for Low-Income, Uninsured People Under Age 65

News Release
April 26, 2006

Alwyn Cassil (202) 264-3484 or

WASHINGTON, DC—As the number of uninsured Americans increases, community safety net providers are stretching limited resources to meet growing prescription drug needs for low-income, uninsured people under age 65, according to a study released today by the Center for Studying Health System Change (HSC).

While the new Medicare drug benefit has helped alleviate concerns about prescription drug access for elderly and disabled Americans, many low-income, uninsured people under age 65 continue to rely on community safety nets to get needed medications, according to the study. Despite redoubled efforts—centered on obtaining discounted drugs and donated medications—to make affordable drugs available to needy patients, safety net providers and community advocates report that many low-income, uninsured people continue to face major barriers to obtaining prescription drugs.

"While policy makers have focused on extending prescription drug coverage to Medicare beneficiaries, the prescription drug needs of nonelderly, low-income people without coverage are a growing problem," said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded principally by The Robert Wood Johnson Foundation.

The study’s findings are detailed in a new HSC Issue Brief—The Community Safety Net and Prescription Drug Access for Low-Income, Uninsured People. The study is based on HSC’s 2005 site visits to 12 nationally representative communities: Boston; Cleveland; Greenville, S.C.; Indianapolis; Lansing, Mich.; Little Rock, Ark.; Miami; northern New Jersey; Orange County, Calif.; Phoenix; Seattle; and Syracuse, N.Y.

"While safety net providers have made acquiring free or reduced-cost medications an integral part of their daily operations, access to affordable prescription drug remains a challenge across communities," said HSC Health Researcher Laurie Felland, coauthor of the study with HSC consulting researcher Erin Fries Taylor of Mathematica Policy Research and Anneliese M. Gerland, an HSC health research assistant.

Safety net hospitals and community health centers (CHCs) typically have on-site pharmacies or contract with outside pharmacies to offer a full range of medications, usually charging patients a copayment. To help control drug costs, safety net providers frequently use generic drugs, and some have adopted preferred drug lists.

The study found that safety net providers have adopted or expanded the following strategies to maintain access to prescription drugs for low-income patients:

  • 340B Discounts—Since 1992, community health centers that are federally qualified and safety net hospitals receiving federal disproportionate share hospital (DSH) payments have been eligible for discounts on brand name and generic prescription drugs through the federal 340B Drug Pricing Program, which requires pharmaceutical manufacturers to give eligible providers discounts equal to or greater than those received by Medicaid. While all of the 12 HSC communities have at least one safety net provider participating in the 340B program, some communities—including Boston, Cleveland, Indianapolis, Miami and Seattle—have a broad network of participating hospitals and health centers. And more safety net providers across the communities recently have applied for the program.
  • Pharmaceutical Manufacturer Assistance Programs—As a group, manufacturers have significantly increased the amount of drugs donated through these programs, with the number of free prescription medicines distributed growing from about 3 million in 1998 to 22 million in 2004, according to the Pharmaceutical Research and Manufacturers of America, an industry trade group. Some safety net hospitals and CHCs have arranged for bulk replacement, a process where drug manufacturers stock provider pharmacies with medications that providers dispense to patients determined to be eligible for the manufacturer’s assistance program but who have not applied individually. This practice allows the pharmacy to offer these medications immediately to patients, rather than pursuing each individual application. The county hospital in Indianapolis acquired more than $3 million worth of free drugs through bulk replacement last year, double the level from two years earlier.
  • Safety Net Programs to Coordinate Care—A few communities fund prescription drugs for low-income, uninsured people through programs that provide primary and preventive care through safety net providers and coordinate access to specialty care. Prescription drugs are included as a vital part of managing patients’ conditions. In addition to tapping into available 340B discounts through participating hospitals and health centers, these programs use funding from federal and state DSH payments, state charity care pools or local property taxes to offer medications to enrollees, usually for a small copayment. Such programs in Lansing, Indianapolis and Boston offer prescription drugs to a large and growing number of people. For example, the Health Advantage program in Indianapolis now serves about 50,000 people—half of the county’s uninsured population.
  • Private Funding and Discount Cards—Some safety net providers have pursued funding from private, usually local, philanthropies to subsidize drug costs. While free clinics are particularly reliant on private funding, some CHCs and hospitals also have turned to foundations for assistance. In a few communities, local drug card programs have been initiated recently that allow residents to purchase discounted prescription drugs from retail pharmacies. Local governments in Lansing and northern New Jersey, for example, have negotiated discounts with retail pharmacies.

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The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded principally by The Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.



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