A pair of community health centers – Heritage Health and Housing in Harlem and Evergreen Health in Buffalo – filed a lawsuit late last week against the New York State Department of Health to block the upcoming launch of a new prescription drug plan for Medicaid members, known as NYRx. It’s part of a final attempt by several stakeholders to derail the plan, which takes effect this Saturday.
As it stands, state officials are planning to transfer the majority of New York’s 8 million Medicaid beneficiaries to the new drug plan. The change will expand the range of pharmacies Medicaid members can visit. And, according to Gov. Kathy Hochul’s administration, it will save taxpayers hundreds of millions of dollars a year by allowing the health department to have more control over pharmaceutical spending.
New York pharmacists, who support the plan, said they will also receive fairer pay under the new plan and are lobbying state lawmakers to allow it to move ahead.
But community health centers and hospitals that serve a lot of Medicaid patients have been opposed to the NYRx switch ever since it passed under former Gov. Andrew Cuomo in 2021. Critics – including New York City Health Commissioner Dr. Ashwin Vasan – have been ramping up their efforts to derail the plan as the launch date approaches. The lawsuit isn’t the only last-minute plea to press pause on the plan.
Our city's most vulnerable and safety net providers cannot afford this plan.
“Our city's most vulnerable and safety net providers cannot afford this plan,” NYC Mayor Eric Adams tweeted last week. New York City’s public hospital system could lose $123 million a year if the prescription drug change goes through, Vasan said in an op-ed in City & State.
City officials and other opponents are concerned that the change will limit the funds safety-net health care providers receive through an obscure federal program known as 340b. That program requires drug manufacturers to provide discounts on prescription drugs to health care providers that serve vulnerable populations. The providers are able to get reimbursed for those drugs by health plans at higher rates and pocket the difference.
Hochul’s budget includes proposals to restore funding to hospitals and health centers affected by the switch, but some critics are still skeptical they will be made whole.
In their lawsuit, filed in a New York Supreme Court, Heritage and Evergreen argued that 340b funds support a wide range of services that might not otherwise get financed, including programs related to substance use treatment and HIV prevention and care. And they argue that because of the patient populations they serve, limiting their ability to access those funds constitutes discrimination in violation of federal law.
The majority of Heritage’s patients are Black or Latino, and about 300 of the clinic’s 5,500 patients are being treated for HIV, according to the lawsuit. Evergreen also specializes in HIV treatment and more than half of its patients identify as LGBTQ, according to the complaint.
NYRx Pharmacy program
Evergreen and the Pride Center of Western New York also released a statement saying they denied Hochul’s request to participate in Buffalo’s Pride parade, which takes place in June, because of her support for the NYRx plan.
Rose Duhan is president and CEO of the Community Health Care Association of New York State. She said she had seen a proposal from state health officials detailing how much money each safety-net clinic will get in supplementary Medicaid funding to replace the 340b dollars they stand to lose. But she said some health centers were inexplicably left off the list, or were allotted less funding than they get from 340b.
“There's still a lot of unanswered questions that we have,” Duhan said, including when payments to health centers will be made.
Duhan said Tuesday she’s still pushing for the launch of NYRx to at least be delayed, but added that at this point, “The Legislature’s in a tough spot to make that happen if I'm being 100% realistic.”
Pharmacists fret that abandoning NYRx now would be ‘disastrous’
Meanwhile, the Pharmacists Society of the State of New York has argued that abandoning or delaying the NYRx switch now would be “disastrous” for Medicaid patients, since preparation for the transition has been underway for two years. Plus, the group said, the change is needed for many independent pharmacies to stay afloat.
Under the current system, each privately run Medicaid plan manages its own prescription drug benefits and uses its own intermediaries to negotiate prices with pharmaceutical companies. Those intermediaries also set the dispensing fees for pharmacies.
Vincent Mazzamuto, who co-owns Sedgwick Pharmacy in the Bronx, said he often loses money on the prescriptions he fills for Medicaid patients, who make up the overwhelming majority of his customers.
The switch to NYRx “will introduce a predictable reimbursement model, one that is sustainable for us, where you are getting paid your actual cost on a product and it's paired with a dispensing fee that reflects your cost of doing business,” Mazzamuto said.
Cadence Acquaviva, a spokesperson for the state health department, declined to comment on the lawsuit filed by Heritage and Evergreen.
But she said in a statement that NYRx will “eliminate profiteering among health care intermediaries, leverage the state’s purchasing power to negotiate with drug manufacturers, streamline practitioner administration, and reduce confusion for the Medicaid recipients themselves when they pick up their medication.”
Acquaviva said the state expects to receive federal approval for its plan to provide supplementary payments to health centers losing 340b funding after the state budget is finalized. It is due April 1, the same day NYRx is supposed to launch.
