Maricruz Salgado was bringing her diabetes under control. Thanks to a federal program that allowed health clinics that serve poor people to buy drugs at steeply 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 soared. Ms. Salgado, who does not have health insurance, suddenly faced costs of hundreds of dollars per month. She could not afford it.
Her doctor switched her to cheaper medicines. Within days of taking one of them, she experienced dizzy spells so severe that she said could barely keep up with her hectic daily schedule as a phlebotomist and an in-home caregiver. By the time she returned to the doctor in September, her blood sugar levels had ticked up.
“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 medicines had to change.”
The price hikes at the clinic happened for a reason that is symptomatic of the tangled web of federal policies that regulate drug pricing. In 2024, drug makers lowered the sticker price of dozens of common medications, which allowed them to avoid massive penalties imposed by the American Rescue Plan, the Covid relief package passed three years earlier. But that change backfired for low-income people like Ms. Salgado.
The decision to make these medications more affordable for large swaths of patients has quietly created another problem: a severe financial hit to the clinics that are tasked by the federal government with caring for the country’s poorest people. These nonprofit clinics operate in every state and serve nearly 32.5 million people, or about 10 percent of the country’s population.
“It’s the law of unintended consequences,” said Beth Powell, the director of pharmacy at The Centers, 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 our folks, that is not the case.”
More than 1,000 community health clinics around the country rely on a decades-old federal program that requires drug companies to offer them deep discounts.
Under the 340B program, as it is called, companies typically sell their brand-name drugs to clinics at a discount, at 23 percent or more off the list price. The same discount scheme applies to state Medicaid plans. 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 the clinics.
For years, that meant that every time a company raised a drug’s list price above inflation, community clinics paid less for it. Many drugs, including insulin, essentially became free.
But the American Rescue Plan made a major change that hit drug companies with even larger penalties for raising prices. In January 2024, companies that continued to raise a drug’s price would have to pay state Medicaid plans 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 lowered the price of at least 77 drugs in 2023 and 2024, according to an analysis by a nonprofit that Mr. Ciaccia leads. The list includes widely used asthma drugs like Advair and Symbicort, as well as diabetes treatments like Victoza, which Ms. Salgado used before the change.
Once the pharmaceutical 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 complexities 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 receive the savings — this is a problem.” She 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 discounts, did not respond to questions about how community health clinics were affected by the lowered drug prices. He said that other recent policies, including directing Medicare to negotiate the price of drugs, had lowered drug costs for low-income patients.
Because of a six-month lag in the way that 340B discounts work, clinics were hit by the change last July. Some clinics began calling patients before their prescriptions expired, offering to switch them to less expensive medicines even though they sometimes had more serious side effects. Others decided to cover the higher out-of-pocket costs, which required dipping into already scarce reserves.
Ms. Salgado said a nurse from Erie called over the summer to tell her about the pricing changes. Until then, she had paid about $15 for a three-month supply of Victoza, which is injected daily to keep blood sugar down. After July, the cost rose to more than $300.
After a few weeks, Ms. Salgado adjusted to the replacement, Byetta, and her dizziness subsided. But the drug must be injected twice a day instead of once. And Ms. Salgado must now use a special pharmacy 20 minutes from her house to qualify for the federal discount on the two insulin drugs she was switched to, the result of increasingly strict rules that 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 diabetes complications at 54. But keeping up with frequent pharmacy visits and medication changes is tough. “Sometimes it does get to a point where it’s like, I just don’t want to do this anymore,” she said.
The changes are also making it harder for community clinics to offer other services.
Under the 340B program, clinics buy the discounted drugs on behalf of their patients. When those patients have insurance, the clinics can then bill insurers for the regular, higher price, pocketing the difference. But now that spread — the difference between how much they pay for the drug and what insurance will cover — has dwindled. That has left clinics with less money to spend on services that are not otherwise covered by government grants or insurance, such as helping patients find housing.
At Valley View Health Center, a network of clinics that serves patients in rural Washington, the 340B money once financed a mental health program that employed eight therapists. In September, the clinic halted the program, laying off the therapists.
“It was such an abrupt change for us that it has definitely affected our ability to care for our patients the way that we needed to,” said Gaelon Spradley, the clinic’s chief executive.
Some patients who have seen costs go up have qualified for patient-assistance programs offered by drug makers. That was the case for Lorena Sarmiento, another patient at Erie Health who uses Lantus, an insulin pen. Last fall, after the 340B discount 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 coupon that lowered her cost to $35 per month.
Doctors and pharmacists at several health clinics said such drug-company assistance programs can be hit or miss. Sometimes they last for a limited time or require that a patient reapply regularly. Patients often have to be legal residents of the United States or have a fixed address.
“It’s a lengthy process, and it’s a lot of hoop-jumping,” said Michael Lin, the chief of pharmacy operations at Family Health Centers in Louisville, Kentucky.
Ms. Sarmiento and her husband, Luis, spend about $500 per month on her medical needs, including special food, medications and a glucose monitor. They are no longer facing 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 good side,” he said. “But lately, that’s been hard.”
