Rural Hospitals Struggle To Stock Expensive Drugs That Could Save Lives

Hospital pharmacist Mandy Langston remembers when Lulabelle Berry arrived at the emergency center of Stone County Medical Center in Mountain View, Ark., last year.

Berry couldn't talk. Her face was drooping on one side. Her eyes couldn't focus.

"She was basically unresponsive," Langston recalls.

Berry, 78, was having a severe ischemic stroke. Each passing second made brain damage more likely. So, Langston reached for the clot-busting drug Activase, which must be given within a few hours to work.

"If we don't keep this drug [in stock], people will die," Langston says.

Berry survived. But Langston fears others could die because of an unintended bias against rural hospitals built into the U.S. health law. An obscure Obamacare provision forces rural hospitals like Langston's to pay full price for drugs that many bigger hospitals buy at deeply discounted rates.

For example, Langston's 25-bed hospital pays $8,010 for a single dose of Activase — up nearly 200 percent from $2,708 a decade ago. Yet, just 36 miles down the road, a bigger regional hospital gets an 80 percent discount on the same drug. White River Medical Center, a 235-bed facility in Batesville, Ark., buys Activase for about $1,600 per dose.

White River participates in a federal drug discount program Congress approved in the early 1990s. The program offers significant price breaks on thousands of drugs to hospitals that primarily serve low-income patients. One federal report found the average discount ranged from 20 to 50 percent, though as illustrated with Activase, it can be much higher.

Rural hospitals have long wanted to be part of the 340B program, too, but were blocked from participating until the Affordable Care Act of 2010. The law added rural hospitals to the program, but, unlike bigger hospitals, rural hospitals can't get discounts on expensive drugs that treat rare diseases because of a last-minute exclusion written into the ACA.

That has left rural hospital pharmacists and health care workers struggling to keep medicines in stock, and wondering if they will be able to adequately care for patients.

Arkansas, for example, is in the "stroke belt," where medical staff depend on Activase to help them battle one of the highest rates of stroke deaths in the country. When Langston went to restock Activase this year, it was so expensive she left a reorder unfilled for more than week, anxiously keeping only one dose on hand.

In Atlantic, Iowa, pharmacy director Crystal Starlin sparingly stocks oncology drugs at Cass County Memorial Hospital. Newly diagnosed cancer patients might have to wait a couple of days to start treatment.

"We just can't keep the extra [drugs] on hand," Starlin says.

In Vermont, North Country Hospital closed its infusion center this spring due to the soaring cost of medicines.

"That was one area we could not afford to be in," says chief executive Claudio Fort. North Country is the only hospital in a two-county region along the Canadian border, and its roughly dozen active chemotherapy patients now must drive 45 minutes for treatment.

The rare-disease exclusion was not publicly debated before being added into the Affordable Care Act. Rather, it was tucked into the health law at the very end of the process. How it wound up there is still a bit of a mystery.

Former PhRMA chief executive Billy Tauzin says he doesn't recall negotiating the exclusion. But, he says, the industry has consistently raised concerns about the drug discount program's reach.

"It's a question of how deeply you can afford to discount drugs that are expensive," says Tauzin, who stepped down just before the ACA passed.

After the health law passed, PhRMA battled for years — in federal court — to keep rural hospitals from getting discounts on rare-disease drugs.

Congressman Peter Welch, a Democrat from Vermont, says it is clear whom the law hurts and helps.

"The pharma lobbyists pay attention, and their lawyers pay attention to the fine print," Welch says. The pharmaceutical industry "changes that fine print ... [and] many legislators don't even realize [that it] will have this adverse impact on hospitals in their communities."

The rare-disease exclusion means that certain types of hospitals — including critical access, sole community and rural referral centers — cannot get discounts on rare-disease drugs. Rare-disease drugs are also known as "orphan drugs," which is a federally approved category of drugs that treat a disease affecting fewer than 200,000 people. Often, they carry price tags of up to $100,000 a year or more.

The Food and Drug Administration gives the orphan drug designation to a medicine as a first step when it agrees with a drugmaker's request to study whether the medicine can be used to treat a specific rare disease. And this can happen even if a drug is already FDA-approved and on the market for use in treating a common condition.

In fact, the popular clotbuster Activase has not won final approval to treat a rare disease. But, on two separate occasions — in 2003 and 2014 — the FDA granted it the orphan designation while research into possible uses for rare conditions is ongoing.

The FDA has approved about 450 drugs to treat particular rare conditions, but thousands of other drugs have that designation and more are identified every week. The list includes generic drugs such as prescription versions of the hormone melatonin and the autoimmune drug abatacept — in other words, medicines used to treat everything from sleep troubles to arthritis have ended up with the designation.

Some drugmakers, such as Janssen Pharmaceuticals, have voluntarily offered discounts to rural hospitals on all of their orphan drugs including Remicade, which is used to treat a number of autoimminune disorders, including Crohn's disease, psoriasis and rheumatoid arthritis. In contrast, drugmaker Genentech sent letters to rural hospitals on Jan. 1 listing dozens of drugs that would not qualify for discounts — including Activase and cancer drug Avastin.

Susan Willson, a Genentech spokeswoman, says the company is "deeply committed to ensuring that people have access to the medicines they need." But, she added, the company believes the federal drug discount program has "grown well beyond its original intent."

Several federal reports in recent years from the Medicare advisory board, as well as the Government Accountability Office and the Office of Inspector General, have evaluated the federal drug discount program's growth. About 40 percent of U.S. hospitals now participate in the program and House Republicans held a hearing this summer questioning the program's growth.

But for Dana Smith, director of pharmacy at Dallas County Medical Center in Fordyce, Ark., the discount program's growth and problems are a separate issue.

"Basically, Genentech is saying to me that rural health care and the patients in rural America are not as important as patients in urban areas," Smith says, adding that the pharmaceutical industry "knows we have less manpower to fight them."

At Stone County Medical Center, emergency room medical director Dr. Barry Pierce well remembers the tense days when his hospital had just one dose of Activase on hand. Stone County now keeps two doses of the stroke drug available.

Stone County is at least 45 minutes away from the next nearest hospital, Pierce notes. "If we don't have the drugs we need, people will die."

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