Maricruz Salgado got her diabetes under control. Thanks to a federal program that allowed health clinics serving poor people to buy drugs at deeply discounted prices, she was able to pay less than $75 for all five of her diabetes medications every three months.
But in July, the cost of three of those drugs skyrocketed. Ms. Salgado, who has no health insurance, suddenly faced hundreds of dollars a month in costs. He couldn’t afford it.
Her doctor switched her to cheaper drugs. Within days of taking one of them, she experienced dizziness so severe that she said she could barely keep up with her hectic daily schedule as a phlebotomy and home care provider. When she returned to the doctor in September, her blood sugar levels had risen.
“We were in a good place,” said Dr. Wesley Gibbert, who treats Ms. Salgado at Erie Family Health Centers, a network of clinics in Chicago that serves patients regardless of their ability to pay. “And then all the drugs had to be changed.”
The clinic price increases occurred for a reason that is typical of the tangled web of federal policies that regulate drug pricing. In 2024, drugmakers slashed the sticker price of dozens of common drugs, allowing them to avoid massive penalties imposed by the US Rescue Plan, the Covid relief package passed three years earlier. But that change failed low-income people like Ms. Salgado.
The decision to make these drugs more affordable for large swathes of patients has quietly created another problem: a severe financial blow to the clinics charged by the federal government with caring for the nation’s poorest people. These nonprofit clinics operate in every state and serve nearly 32.5 million people, or about 10 percent of the nation’s population.
“It’s the law of unintended consequences,” said Beth Powell, director of pharmacy at The Cents, which operates five community health clinics in the Cleveland area. Ms. Powell said that while many consumers benefited from the companies’ decision to lower prices, “for us, that’s not the case.”
More than 1,000 community health clinics across the country rely on a decades-old federal program that requires drug companies to give them deep discounts.
Under the 340B program, as it’s called, companies typically sell their brand-name drugs to clinics at a discount of 23 percent or more off the list price. The same rebate program applies to state Medicaid programs. But if a company raises a drug’s list price above the rate of inflation, a penalty kicks in, forcing it to offer even deeper discounts to clinics.
For years, that meant that whenever a company raised the list price of a drug above inflation, community clinics paid less for it. Many drugs, including insulin, became essentially free.
But the American Rescue Plan made a major change that hit drug companies with even bigger price-gouging penalties. In January 2024, companies that continued to raise the price of a drug would have to pay state Medicaid programs every time those drugs were used, potentially costing the industry billions of dollars.
“That was a bridge too far” for the companies, said Antonio Ciaccia, a drug pricing researcher who advises state governments and employers.
Manufacturers cut the price of at least 77 drugs in 2023 and 2024, according to an analysis by a nonprofit led by Mr. Ciaccia. The list includes widely used asthma medications such as Advair and Symbicort, as well as diabetes treatments such as Victoza, which Ms. Salgado was using before the change.
Once drug companies lowered their list prices, the inflation penalties evaporated. That meant community clinics had to start paying the usual discounts of 23 percent or more off the list price — far more than the pennies they used to pay.
“Unfortunately, the complexity of the U.S. health care system can reduce access and affordability for many,” Jamie Bennett, a spokeswoman for Novo Nordisk, which makes Victoza, said in a statement. “Even when we lower our prices, too often people don’t get the savings — that’s a problem.” He said the company also has patient assistance programs to make its products more affordable.
David Bowman, a spokesman for the Health Resources and Services Administration, which oversees the 340B rebates, did not respond to questions about how community health clinics were affected by the reduced drug prices. He said other recent policies, including requiring Medicare to negotiate drug prices, have reduced drug costs for low-income patients.
Because of the six-month delay in how the 340 billion rebate works, clinics were hit by the change last July. Some clinics began calling patients before their prescriptions expired, offering to switch them to cheaper drugs, even though they sometimes had more serious side effects. Others decided to cover the higher costs out of pocket, which required dipping into already scarce supplies.
Ms. Salgado said a nurse from Erie called over the summer to tell her about the price changes. Until then, he had paid about $15 for a three-month supply of Victoza, which he injects daily to keep his blood sugar low. After July, the cost rose to more than $300.
After a few weeks, Mrs. Salgado adjusted to the substitute, Bietta, and her dizziness subsided. But the drug must be injected twice a day instead of once. And Ms. Salgado must now use a specialty pharmacy 20 minutes from her home to qualify for a federal rebate on the two insulin drugs she switched to, the result of increasingly stricter rules the companies are imposing on health clinics.
Ms. Salgado, who is 39, said she is determined to avoid the fate of her mother, who died of complications from diabetes at 54. But keeping up with frequent pharmacy visits and medication changes is difficult. “Sometimes it gets to a point where it’s like, I just don’t want to do it anymore,” she said.
The changes also make it harder for community clinics to offer other services.
Under the 340B program, clinics buy the drugs at a discount on behalf of their patients. When those patients have insurance, the clinics can then charge the insurers the regular, higher price, earning the difference. But now that gap — the difference between how much they pay for the drug and what insurance will cover — has narrowed. That has left clinics with less money to spend on services not otherwise covered by government grants or insurance, such as helping patients find housing.
At Valley View Health Center, a network of clinics serving patients in rural Washington, the $340 billion once funded a mental health program that employed eight therapists. In September, the clinic discontinued the program, firing the therapists.
“It was such an abrupt change for us that it certainly affected our ability to care for our patients the way we needed to,” said Gaelon Spradley, the clinic’s chief executive officer.
Some patients who have seen costs rise qualify for patient assistance programs offered by drug manufacturers. That was the case for Lorena Sarmiento, another patient at Erie Health who uses Lantus, an insulin pen. Last fall, after the $340 billion rebate was changed, she was quoted $490 at her pharmacy — the retail price for a box of insulin pens. Erie Health sent her to another pharmacy, which helped her sign up for a manufacturer’s voucher that brought her costs down to $35 a month.
Doctors and pharmacists at many health clinics said such drug company assistance programs can be hit or miss. Sometimes they last for a limited time or require the patient to reapply regularly. Patients often must be legal residents of the United States or have a fixed address.
“It’s a time-consuming process and it’s a lot of hoop-jumping,” said Michael Lynn, the chief of pharmacy operations at Family Health Centers in Louisville, Kentucky.
Ms. Sarmiento and her husband, Luis, spend about $500 a month on her medical needs, including special foods, medications and a glucose monitor. They no longer face the highest insulin price, but their costs are still 10 times what they were just a few months ago, when they spent about $10 on three months’ worth of insulin.
Mr. Sarmiento said he tries not to complain. “You always have to look on the bright side,” he said. “But lately, it’s been hard.”
