At Alchemy, we work with STD clinics, Ryan White HIV clinics, and/or Federally Qualified Health Centers throughout the United States to develop and operate compliant, tech-enabled in-house pharmacies on behalf of these clinics. These clinics are heavily reliant on the federal 340B drug program to generate revenues for their financial health & viability, and to sustain services for their low income and underserved communities living with HIV.
A quick primer on the segmentation of the 340B market. STD clinics, Ryan Whites, FQHCs fall under the category of “federal grantees” and specialty clinics, which represent a small slice of the overall 340B program (14%), while larger hospitals and health systems represent the majority of the 340B program. It is important to note that the original intent of the 340B program (launched in 1992) was initially designed for these grantees working with underswerved communities, but the classification of safety net providers eligible for the 340B program has since been expanded to include larger hospitals and health systems in recent years (2004 and 2010). We are not here to deny or dispute the existence of fraud, waste and abuse in the 340B program, that’s an important conversation to have another day. Today, we must focus on the importance of the linkage between HIV prevention, STD clinics and the 340B drug program.
The service and care provided by STD clinics, Ryan Whites, and FQHCs drive a meaningful portion of the American healthcare system, as nearly 1 in 11 Americans visits one of these clinics. It is within the walls of these clinics, where we see firsthand the disproportionate impact these clinics have on serving people living with HIV and other related conditions. It is within this community of clinics, that the original intent of the 340B program is clearly demonstrated and with which pharmaceutical manufacturers are actually highly aligned - these clinics truly stretch scarce federal resources for outsized impact on the health of the communities they serve.
Every STD Clinic in America serving people living with HIV is eligible for 340B program participation through the CDC, which is why we are writing to you today. Their grant awards & sub-awards come through STD grants (Section 318 grants) under the CDC. Compressing or eliminating Section 318 grants would remove their ability to participate in the 340B program, and as a result, certainly shut their doors due to lack of funding streams.
From our perspective, we care less about the size of the grant award versus the general availability and number of the grant statuses awarded, as these grants allow these entities to participate in the 340B program and keep the lights on to sustain patient services through these funds. Simply preserving Section 318 grants (independent of the actual federal funding levels), holds a critically important impact on the overall control and prevention of HIV in America.
1. HIV prevention and Section 318 impacts all demographics of the American public, not just Black and Brown communities.
Typically, one would think that an STD Clinic serves Black and Brown, gay, urban populations but this is simply not true. The fastest growing demographic (and in some cases, the majority) of the members served are white, straight, male, and rural. Why is this? Because the largest uncontrolled vector for HIV & Hepatitis C is from substance & opioid use disorders, which impact all corners of our society.
STD Clinics use 340B funds to cover for what insurance & Medicaid cannot pay for – bringing testing & treatment services on-site for these populations through mobile clinic partnerships with recovery centers, helping navigate insurance & linkage to care, and hand delivering essential medicines to patients to keep them adherent and virally suppressed (i.e. preventing the spread of HIV). They can only service these populations - who require this level of service to keep them effectively retained & linked to care - through 340B program funds. For these Clinics, (1) HIV viral suppression rates (2) Hepatitis C cure rates are significantly higher than the general population, and serve the broadest array of the American public. They are able to provide these essential services through CDC’s Section 318 grant funding availability.
2. HIV prevention grants (or more broadly, STD grants) are force multipliers from an efficiency of funds perspective.
For every $1 conferred through grant funding is multiplied 3:1 (or even greater) through 340B program savings. Since Section 318 grants allow clinics to participate in the 340B drug program, and at its core, the 340B program is funded by pharmaceutical manufacturers through discounts vs. direct taxpayer dollars, every dollar of Section 318 grants is essentially “matched” by manufacturers through 340B program discounts. The 340B program in our opinion is the best, and most effective, use of private funds to support the health of underserved Americans, without the use of federal taxpayer dollars. In fact, we believe the current administration should be looking for more examples across other industries and sectors, to instrument a program similar to 340B, where private markets can benefit the overall American population.
For our clinics, who pharmaceutical manufacturers state on record do demonstrate the intent of the program to utilize 340B savings to ‘stretch scarce federal resources’, almost all of them are eligible for participation through Section 318 grants & sub-grants. It would be in our estimation, catastrophic not just for infectious disease control, but wasteful and inefficient use of federal funds, to cut off these grants. The most important attribute of these grants is their link to 340B, which are compounding multipliers, and a part of our public health system that actually demonstrates an efficient use of federal funds relative to other parts of our healthcare system.
For our part, we are building the technology, clinical innovation, and operational excellence that utilizes the 340B program to improve efficiency, transparency, and program intent to improve the lives of the hardest to serve Americans. We see first-hand a clear and direct link between the value per dollar spent that Section 318 & HIV Prevention grants provide.
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