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VOL. 20, NO. 2 n THE AMERICAN JOURNAL OF MANAGED CARE n 11
n POLICY n
Medications play an essential role in the prevention and
treatment of disease. Moreover, adherence to drug regi-
mens has proved to be a primary determinant of success-
ful clinical outcomes.1 However, medication cost continues to be a
common barrier to medication access. In fact, research shows that
chronically ill patients report cost of medications as a cause for un-
derusing prescription medications. One recent study found that 14%
of heart failure patients with prescription drug coverage and 25% of
those without medication coverage failed to fill 1 or more prescrip-
tions because of cost.2 Health economic studies in the United States
demonstrate that consumption of prescribed drugs is reduced with in-
creasing co-payments.3
Medication underuse has a negative effect on healthcare outcomes.4,5
A recent large-scale study of elderly and welfare recipients in Canada
found that the reduced consumption of essential drugs, caused by the
introduction of a co-payment scheme, led to an increased number of
adverse events including increased emergency department visits, acute
care hospitalization, long-term care admission, and death.6,7 Inadequate
access to medications is especially problematic for the low-income and
uninsured populations who often resort to alternative cost-reducing
strategies such as not having medication dispensed at all, delaying un-
til payment is possible to fill the prescription, or reducing the dose in
order to make the medication last longer.8 In fact, recent health policy
literature has cited racial and ethnic minority status, female gender, lack
of health insurance, low income, disability, and chronic illness as being
positively associated with cost-related nonadherence.9 As such, it is im-
portant to explore ways in which access to medications can be increased
for these vulnerable patient populations.
In order to address these barriers and better provide low-income and
uninsured patients with improved access to medications at low or no
cost, safety net clinics have adopted programs such as pharmaceutical-
sponsored patient-assistance programs (PAPs) and the 340B Drug Pric-
ing Program. These programs promise to improve the financial stability
of those entities, better serve vulnerable patients, and decrease the bur-
den of cost for patients. PAPs rely on pharmaceutical manufacturers to
help serve indigent populations.
These philanthropic programs
are sponsored by pharmaceutical
manufacturers who provide eligible
patients with brand name prescrip-
tion medications at a low cost or at
The Impact of Patient Assistance Programs and the
340B Drug Pricing Program on Medication Cost
Shahrzad Bazargan-Hejazi, PhD; Yelba M. Castellon, MD; Miles Masatsugu, MD;
and Roberto Contreras, MD
Objectives: Patient Assistance Programs and the
340B Drug Pricing Program promise to improve
the financial stability, better serve vulnerable
patients, and decrease the burden of cost for un-
insured patients. Our objective is to examine the
financial impact that PAPs and the 340B Program
have on improving medication cost.
Study design: Retrospective analysis of medica-
tion dispensary data.
Methods: Dispensary data for uninsured patients
obtaining medications at 2 community health
centers were collected from February 1 to Febru-
ary 29, 2012. Uninsured patients were divided into
2 samples: (1) patients receiving PAP medications
and (2) patients receiving 340B medications. The
main outcome measured was the patient’s cost
savings. Cost savings were calculated based on
the amount a medication would have cost had
it been purchased by patients at prices found on
Epocrates software (drugstore.com). A paired
sample t-test model using continuous variables
was utilized to calculate confidence intervals.
Results: A total of 1420 PAP and 2772 340B indi-
vidual medications were dispensed to uninsured
patients in February 2012. For patients receiving
PAP medications the mean ± standard deviation
(SD) for age = 52 ± 10. Average cost was $0.11
(95% CI, $0.04-$0.17) and average savings was
$617.36 (95% Cl, $581.32-$653.40). For patients
receiving 340B medications the mean ±SD for
age = 50 ± 14. Average cost was $11.50 (95% CI,
$10.55-$12.45). Average saving was $62.31 (95%
CI, $57.99-$66.63).
Conclusions: PAPs and 340B provide significant
medication savings for uninsured patient. More
research is needed to establish “best practices”
for the successful integration of PAPs.
Am J Manag Care. 2014;20(2 ):00-00
For author information and disclosures,
see end of text.
TOC Précis for Bazargan-Hejazi:
Examining the financial impact that Patient Assistance
Programs and the 340B Drug Pricing Program have on
improving medication cost.
In this article
Take-Away Points / p00
www.ajmc.com
Full text and PDF
12 n www.ajmc.com n FEBRUARY 2014
n POLICY n
no cost based on income qualifications. Patients are typically
screened for eligibility by clinic support staff. An application
is then submitted to the drug manufacturer by the clinic on
behalf of the patient. Medications are subsequently sent to
the clinic to be dispensed to the applicant. In order to com-
ply with eligibility requirements, patients must reapply on an
ongoing basis.
The purpose of the 340B prime vendor program is to re-
duce the price of outpatient prescription and over-the-coun-
ter (OTC) drugs to Covered Entities including federally
qualified health centers (FQHC) and disproportionate share
hospitals. Covered entities can only dispense an outpatient
medication at these reduced prices to “patients” of the Cov-
ered Entity. Patients must have an established relationship
with the Covered Entity such that the Entity maintains re-
cords of the individual’s healthcare and they must receive
healthcare from a healthcare professional who is employed
or under contractual arrangement with the Covered Entity.10
The 340B Drug Pricing Program was created in 1992 to pro-
vide financial relief to safety net organizations that provide
care for the medically underserved.10 It resulted from the
enactment of Public Law 102-585, the Veterans Health-
care Act, which is codified as Section 340B of the Public
Health Services Act. Eligibility and enrollment for 340B is
administered by the Office of Pharmacy Affairs, an arm of
the Health Resource and Services Administration (HRSA).
Participants in 340B must follow strict policies and proce-
dures to ensure adherence to program eligibility guidelines.
The 340B Program establishes a ceiling price, which is the
maximum price a manufacturer can charge the Covered En-
tity. Those prices are calculated quarterly by manufacturers.
Savings translate into 20% to 50% of the average wholesale
price (AWP) for entities enrolled in this program.10 Medica-
tions are purchased in bulk from 340B vendors at reduced
prices and dispensed to clinic patients at the time of the
visit.
Dispensaries associated with safety net clinics play an
important role in making medications accessible for under-
served patients. They provide low-cost or no-cost medications
through programs such as PAPs and
340B which promise to extend signifi-
cant medication cost savings for the un-
insured. While many of the studies have
shown cost saving afforded to Covered
Entities through participation in pro-
grams such as 340B and PAPs,10-14 the
objective of this study is to examine the
financial impact of these programs on
improving medication cost for patients.
METHODS
We performed a retrospective data analysis of dispensary
data for uninsured patients obtaining outpatient medications
at 2 community-based Federally Qualified Health Centers
(FQHC). Dispensary data was collected from February 1 to
February 29, 2012. In order to be eligible for this study, pa-
tients had to meet the following requirements: They had to
be (1) seen at the clinic for primary care; (2) not have third-
party payer for outpatient medication benefits (patients eli-
gible for medical or other government-sponsored outpatient
pharmacy benefits were not eligible); (3) have income at or
below the 100% poverty level; and (4) require a medication
that is on the formulary. All patients were routinely screened
for PAP eligibility. If a patient is eligible for PAP based on the
medication they require and their income status, an applica-
tion is submitted by the clinic support staff to the manufac-
turer on behalf of the patient. Medications are then mailed
from the manufacturer directly to the clinic to be dispensed
on-site. Patients that are not eligible for PAPs receive 340B
medications, provided they meet the eligibility criteria. 340B
medications are purchased in bulk at discounted prices and
dispensed to patients at their purchase price. All dispensary
transactions are recorded by the dispensary software.
Uninsured patients were divided into 2 samples: (1) pa-
tients receiving PAP medications and (2) patients receiving
340B medications. The main outcome measured was the pa-
tient’s cost savings. Cost savings were calculated based on the
amount a medication would have cost if it had been purchased
by patients at prices found on Epocrates software (drugstore.
com) during the month of February 2012. A paired model us-
ing continuous variables was utilized to calculate confidence
intervals (SPSS, 2010).
RESULTS
Patients served at the Community Health Center were
3% African American, 3% Asian, 81% Latino, 12% White,
1% Other. A total of 81% of the patients reported to be
Take-Away Points
Utilization of programs such as Patient Assistance Programs and the 340B Drug Pricing
Program can provide significant medication savings for uninsured patients. In this study,
patients receiving PAP medications:
n Had a lower cost of medications per visit and a higher cost savings per visit. This can
be explained by the fact that eligible PAP medications are exclusively brand name pre-
scription drugs which are typically more expensive when compared with the cost of the
same generic drug purchased through the 340B program.
n On the other hand, while the savings for 340B medications where less than that of
PAPs, the 340B Program allows for purchasing both generic prescription drugs and over-
the-counter drugs.
VOL. 20, NO. 2 n THE AMERICAN JOURNAL OF MANAGED CARE n 13
Patient-Assistance Programs and Medication Cost
that there are many barriers to using PAPs. In a study assess-
ing use of PAPs by 215 safety net clinics in California, Texas,
and Florida, 67% of clinics not using PAPs for eligible patients
reported that PAPs applications were too time consuming and
complex.14,17,18 In addition, clinics reported investing substan-
tial staff resources to managing PAP applications.17 Other
potential barriers frequently cited were program requirements
changing without notice, unrealistic income documentation
100% below federal poverty level, 13% were 101% to 105%
below federal poverty level, 3% were 151% to 200% below
federal poverty level, and 3% were over 200% below fed-
eral poverty level. Seventy-five percent (75%) of the pa-
tients were uninsured, 25% were insured. Slightly over half
(51%) of the patients spoke English as their language of
preference and 49% spoke another language (see Table 1).
A total of 1420 PAP and 2772 340B individual medications
were dispensed to uninsured patients in February 2012. The
list of commonly dispensed medications under each program
with average costs for a 1-month supply is included in Table 2.
Patients in the sample were mostly women (71.6%) with
a mean +/- SD age of 50.1 +/- 27.0 years. For patients receiv-
ing PAP medications the mean +/- SD for age = 52 +/- 10.
Average cost of medications per visit was $0.11 (95% CI,
$0.04-$0.17) and average savings per visit was $617.36 (95%
CI, $581.32-$653.40). For patients receiving 340B medica-
tions the mean +/- SD for age = 50 +/- 14. Average cost of
medications per visit was $11.50 (95% CI, $10.55-$12.45).
Average savings on medications per visit was $62.31 (95%
CI, $57.99-$66.63).
DISCUSSION
Pharmacies associated with safety net clinics play an im-
portant role in making medications accessible for low-income
and uninsured patients by providing low-cost or no-cost
medications. Utilization of programs such as PAPs and 340B,
FQHCs can provide significant medication savings for unin-
sured patients. In this study, patients receiving PAP medica-
tions had a lower cost of medications per visit and a higher
cost savings per visit. This can be explained by the fact that
eligible PAP medications are exclusively brand name pre-
scription drugs, which are typically more expensive when
compared with the cost of the same generic drug purchased
through the 340B program. On the other hand, while the sav-
ings for 340B medications were less than those for PAPs, the
340B program allows for purchasing both generic prescription
drugs and OTC drugs. In addition, there were almost twice as
many 340B medications dispensed in the month of February,
providing increased access to medications for patients who
may not otherwise have been able to afford their medications.
Both 340B and PAPs were successful in providing significant
medication cost savings for patients.
Enabling patients to gain access to necessary mediations
allows for greater adherence to prescribed therapy and better
healthcare outcomes. However, it is important to consider
the limitations associated with each of these programs.
While individual studies have demonstrated cost savings
to healthcare institutions,15,16 other studies have suggested
n Table 1. Demographics of Patients Served at East
Valley Community Health Center
Characteristic % of patients
Race
African American 3
Asian 3
Latino 81
White 12
Other 1
Below Federal Poverty Level
100% 81
101-10 5% 13
151-200% 3
Over 200% 3
Insurance Status
Insured 25
Uninsured 75
Language Preference
English 51
Other 49
n Table 2. Commonly Dispensed Medications
Under Patient Assistance Programs (PAPs) and 340B
With Average Costs for a 1-Month Supply
PAP 340B
Lantus $128.30 Metformin $5.15
Neurontin $340.22 Glyburide $2.87
Singulair $487.95 Insulin $8.29
Diovan $263.28 Hydrochlorothiazide $1.89
Protonix $529.99 Atenolol $1.68
Januvia $657.94 Simvastatin $2.63
Norvasc $271.00 Acetaminophen $0.68
Nasonex $130.99 Fluoxetine $2.60
Apidra $47.99 Amitriptyline $1.14
Procardia $433.29 Azithromycin $23.82
14 n www.ajmc.com n FEBRUARY 2014
n POLICY n
requirements for indigent patients, frequent reapplication
required by patients, and applications differing among com-
panies.17 One study asked clinic staff to provide potential im-
provements to PAPs and found that 84% of respondents noted
there is a need for standardization of the PAP application and
reapplication process across PAP programs, and 83% recom-
mended a standardized eligibility criteria across all programs.17
While PAP software has been developed in order to address
some of these shortcomings and attempt to streamline the
PAP application process, there is no single program that can
meet the needs of every organization. Therefore, organizations
must take a close look at their needs and compare them with
the features of each program in order to find the best fit.18 In
addition, the individual cost of software must also be taken
into account.
Likewise, 340B provides economic benefits to participat-
ing organizations.11,12,19,20 However, these benefits do not come
without challenges. Among the most commonly cited chal-
lenges is that eligible 340B sites must know how to interpret
complex eligibility rules and 340B regulations, which are con-
stantly changing.10,19 In addition, there is an increased need for
price transparency and program oversight by HRSA in order
to ensure drug manufacturer compliance with drug contract
pricing.21 One article quotes a report issued by the Office of
Inspector General regarding 340B that stated: “Theoretically,
the government and manufacturers should calculate the same
ceiling price because they use the same numbers. However,
HRSA does not check and thus is unable to detect whether
manufacturers perform the calculation properly and whether
entities are paying the correct ceiling prices.”21
Other limitations include the need for an onsite dispen-
sary for participating 340B entities, although studies have
shown that organizations are finding creative ways to maneu-
ver around this obstacle by providing remote dispensing via
2-way videoconferencing.22 The clinic where this study took
place struggled with finding access to “penny medications,”
which are medications that go on sale on a quarterly basis
from the pharmaceutical manufacturers, at a cost of 1 cent.
These medications are sold via the major distributors, but they
are not advertised, nor are they listed under normal search
functions on distributors’ websites, making them difficult to
purchase. Moreover, funding was limited for purchasing more
sophisticated and comprehensive ordering software.
Limitations
Some of the limitations of the study were that cost savings
were calculated using average market value versus other, more
affordable alternatives such as the Walmart $4 Prescription
Program. Also, drug pricing was not retrospectively graded
and may not accurately represent what patients would have
paid, given that online drug prices were used. In addition,
fluctuating market prices made it difficult to perform this
analysis retrospectively over time. Lastly, this study focused
only on cost savings for patients, while to sustain a program, it
should be cost-effective for the safety net clinic.
Although the 340B Program may serve as an alternative
to PAPs in cases where there is limited support staff and fund-
ing, more research is needed to establish “best practices” for
the successful integration of PAPs and/or 340B among safety
net clinics. Future studies should further explore a cost/ben-
efit analysis for both programs. Particularly, there is a need
for comparisons of the cost-effectiveness for patients using
PAPs with those for patients using other options that mini-
mize medications costs.23 Other issues to consider are how
these programs will be impacted with the implementation
of healthcare reform. Some believe that PAPs can be more
costly in the long run as they encourage patients to rely on
using more costly brand name prescriptions if and when they
acquire insurance.
Author Affiliations: Charles Drew & David Geffen School of Medicine,
University of California Los Angeles (SBH, YC); East Valley Community
Health Center, West Covina, CA (MM, RC).
Source of funding: None reported.
Author Disclosures: The authors (SBH, YC, MM, RC) report no rela-
tionship or financial interest with any entity that would pose a conflict of
interest with the subject matter of this article.
Authorship Information: Concept and design (SBH, MM, YC); acquisi-
tion of data (BWS, MM, YC, RC); analysis and interpretation of data (SBH,
MM); drafting of the manuscript (SBH, MM, YC); critical revision of the
manuscript for important intellectual content (SBH, MM, YC, RC); statistical
analysis (YC); provision of study materials or patients (SBH, RC); administra-
tive, technical, or logistic support (SBH, MM, YC, RC); supervision (SBH,
MM, RC).
Address correspondence to: Shahrzad Bazargan-Hejazi. Charles R. Drew
University of Medicine and Science–Psychiatry, Los Angeles, CA 90059; East
Valley Community Health Center, West Covina, CA 91790. E-mail: shahrza-
dbazargan@cdrewu.edu.
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