Those seeking to understand the challenges of providing health care to patients in rural areas of the United States need to look no farther than Vermont. I am proud to lead Rutland Regional Medical Center, the largest community hospital in the state, where we have the privilege of delivering care to 60,000 patients living in central and southern Vermont, as well as in neighboring communities in New York. Due to our rural environment and our population being heavily weighted in Medicare and Medicaid, our mission to provide that care and meet the vast needs of our community comes at a considerable cost, oftentimes without reimbursement sufficient enough to cover the costs.
Our participation in the 340B program allows us to continue to offer vital services to our community, regardless of the unreimbursed cost of some of the care. With approximately 25% of our care going to patients qualifying for Medicaid due to low incomes or disabilities, Rutland Regional is eligible for discounts on prescription drugs we purchase. These discounts create savings that we invest in critical services and support for our patients, especially those who are most in need. While we are using 340B funds to care for our most vulnerable patients, it is important to note that none of that expanded care to this vulnerable population comes at any additional cost to our nation’s taxpayers.
340B is a lifeline for our hospital and the patients who rely on the health care safety net we help to provide. Because of 340B, we can provide comprehensive care not only at our main hospital but also at 22 specialty service clinics. Without these services, patients would have to drive long distances to receive comparable care, which would be challenging for our aging population. Additionally, due to 340B, we can offer financial assistance to patients up to 500% of the federal poverty level, well above federal and state requirements. Furthermore, 340B helps us address our significant health care workforce shortages by allowing us to operate workforce training programs, ensuring our communities have the necessary nurses, pharmacists, X-ray technicians and other health care professionals to meet their needs.
In 2022, Rutland Regional provided $4.3 million in free or reduced financial assistance activity for low-income patients and more than $36 million of unpaid cost of care to uninsured and underinsured patients. We depend on our more than $15 million annual 340B savings to help offset some of those care delivery costs. While the 340B program is crucial to Rutland Regional, it is equally important to all Vermont hospitals. In 2021 and 2022, savings from 340B were more than total operating margins across all the hospitals, meaning that all hospitals would have had a financial loss if not for the program. In this year’s hospitals’ budgets, 340B savings account for 62% of all total income to Vermont hospitals, offsetting the underfunding in Medicaid and Medicare programs. Losing 340B savings puts our ability to provide care and remain financially viable at risk, which would have dramatic impacts on our local communities.
Regrettably, contemplating restrictions to 340B-discounted drugs is not a theoretical exercise for Rutland Regional and thousands of other safety-net hospitals across the United States. Starting at the height of the COVID-19 pandemic in mid-2020, numerous pharmaceutical companies began refusing to provide mandated discounts to hospitals for drugs dispensed to their patients through community and specialty pharmacies. Our reliance on these partnerships with these pharmacies supports the financial assistance we provide to our patients while generating needed resources to invest in hospital technology and the programs and services our community expects of us. When drug companies do not offer the discounts the law requires, it severely undermines the 340B benefit for safety-net hospitals and patients.
Presently, 28 drug companies restrict access to 340B drug discounts for hospitals, and we estimate their actions will deprive Rutland Regional of more than $7 million a year that should be going toward patient care. Some drug companies even extend these restrictions to Federally Qualified Health Centers (FQHCs) that many Vermont residents use for primary care services. Despite efforts by both the Trump and Biden administrations to urge these companies to reinstate the discounted pricing, several drug manufacturers have gone to federal courts to challenge these attempts to enforce the law. In the meantime, these companies are reaping billions of dollars in profit that should be going into the health care safety net.
In summary, the cessation of 340B discounts by drug manufacturers compels hospitals like Rutland Regional Medical Center to raise charges beyond what would otherwise be necessary in order to sustain essential services for our community. This enriches the manufacturers at the expense of Vermonters, who now bear a greater health care financial burden or who risk going without care due to access limitations.
Our mission to the health of our patients in need is far too important for this harm to continue. It is imperative for Congress to mandate that drug companies restore drug discounts for safety-net hospitals, health centers and clinics as initially intended by lawmakers to benefit from the savings. Federal legislation is coming to reinforce the 340B lifeline, and we will be calling on Vermont’s elected officials to provide their support.
Judi Fox is president and CEO of Rutland Regional Medical Center in Rutland.
