Bill could end health center's tax exemption

Sen. Chas Vincent of Libby has proposed a bill in the Montana Legislature that could lead to the revocation of Northwest Community Health Center’s tax-exempt status.

The bill, SB407, would revoke the tax-exempt status and impose a fine in lieu of taxes for non-profit pharmacies operating commercial enterprises under a federal drug discount program.

The program in question, known as 340B, allows community health centers, critical access hospitals and other so-called safety net healthcare providers the opportunity to purchase pharmaceuticals at a steeply discounted rate and pass those savings on to their patients based upon their ability to pay.

Vincent said there is a loophole in the program that allows providers, such as Northwest Community Health Center, to purchase the pharmaceuticals at the discounted rate, often pennies on the dollar, and then bill Medicare and third-party insurance providers the full retail cost of the drug and pocket the difference.

“We’re essentially having one federal program bilking another and having the pharmacy and the community health center, in this case, split the windfall,” Vincent said.

The program allows participating providers, such as Northwest Community Health Center, to contract with private pharmacies for distribution. In Lincoln County, Northwest Community Health Center contracts 340B drug purchases exclusively through Granite Pharmacy in Libby. In order to receive the discounted rate, uninsured and underinsured patients must purchase their prescription medications from Granite.

Northwest Community Health Center receives funding from the federal government in order to provide care to those unable to pay. It is unfair of them, Vincent said, to use that money, as well as money made from the 340B loophole, in order to expand into a line of business that is in direct competition with private pharmacies in Lincoln County.

Michael Wells, a pharmacist at Kootenai Drug in Troy, agreed with Vincent.

“For years our patients have been asking to participate in the program because they can’t afford the retail price of the medications,” Wells said. “This puts us at a huge competitive disadvantage. There is no business model in the world where one can compete with another who is getting product at 1/100th of the cost and is funded by the taxpayers.”

The center’s executive director, Maria Clemons, said the clinic does generate additional revenue from the 340B program, but she declined to label the income as profit. She said the excess revenue generated from the 340B program is used to fund discounted and charity care in other practices at the center.

“Any funds we receive in any line of business helps off-set the costs for uninsured or underinsured patients,” she said. “Any revenue generation is about expanding access to care.

“The proposed legislation by Sen. Vincent would eliminate access to drugs for a lot of uninsured patients.”

Access to care is the primary reason Sen. Vincent is proposing the bill, he said.

The clinic’s exclusive contract with Granite Pharmacy creates an unnecessary burden on patients in other parts of Lincoln County. Patients seen in Troy or Eureka, in order to take advantage of the discounts, must either travel to Libby for their medications or wait days for them to arrive via mail.

Wells agrees with Vincent.

“With a Northwest Community Health Center clinic located 100 yards away, why should patients have to drive 36 miles to and from Libby for their medicine?”

The problem is magnified for patients in Eureka, as the distance is much greater, Vincent said.

“Why should someone be forced to burn a tank of gas and make a 140-mile round trip in order to purchase their medicine at a discount?” Vincent asked.

Wells said his goal isn’t necessarily the revocation of the center’s tax-exempt status. What he wants is for other pharmacies in the county to be allowed into the program.

“What we’re asking for is to be able to participate in this program and make sure our mutual patients get the medications they need. There are huge barriers to quality care when a patient is in financial need, transportation often becomes an issue,” he said. “I’ve seen people go without their medications because they couldn’t get to Libby to get the discounted drug.”

Vincent said the bill is about moving the conversation forward. The bill was tabled late Thursday by the Taxation Committee, but Vincent immediately pushed it to Finance and Claims, where a hearing was held on the fiscal note.

Passage, though, isn’t his primary concern.

“We need to have a conversation about this. We need to get the 340B program back to doing what it was intended to do,” he said.

The conversation has started, and has become heated. Northwest Community Health Center’s clinical programs manager, Nicky Willey, sent an email to Sen. Fred Thomas following Vincent’s testimony in front of the taxation committee. In the letter, Willey states the clinic declined to testify before the committee due to fear of Sen. Vincent.

“First and foremost, our health center was advised by the Montana Primary Care Association to not be present at the hearing today as they were fearful that Sen. Vincent would again attack our executive director as he has done in the past,” the letter stated.

Willey went on to accuse Vincent of having a conflict of interest, as his wife is a pharmacist at Rosauers in Libby and of having a vendetta against the center. She further accused Vincent of intimidating a center board member at a local gym.

“Sen. Vincent did address a board member at the gym, as stated by him. The board member in question was afraid for his own safety during his interaction with the senator as he was very combative and aggressive and the board member in question is in his 70s,” the letter stated.

Vincent dismissed the allegations in the letter, claiming they are weak attempts to distract attention away from the issue.

“I have a few things to say about the accusations below, and look forward to addressing these points on the floor of the Senate should the bill pass out of your committee,” Vincent wrote to Sen. Thomas in response to Willey’s letter. “I tend to not respond to character assassination attempts, but this one is particularly egregious, I felt compelled.

“First, it is not I that has been attacking anyone, quite the contrary. Misrepresenting the facts to deflect from the issue at hand has been the chosen method of engagement by the leadership of this community health center, and the patently false statements below are a clear testament to that.”

Vincent acknowledged the fear expressed by the community health center’s leadership, but argued it was not fear of him but fear of being held accountable that prevented them from testifying before the committee.

“To suggest that the Libby CHC didn’t attend today’s hearing out of fear is probably true, but to suggest it was to avoid another ‘attack’ by me is ludicrous,” Vincent wrote. “Representatives of this community health center fear being held accountable for their actions, period.”

Vincent said he has taken up the fight because the health center is not acting in the best interests of its patients in Lincoln County.

“It is just dripping with irony that I’m the guy fighting for the people they’re supposed to be taking care of,” Vincent said.

Vincent’s bill is still before the Senate Finance and Claims Committee. If passed by the committee, it will be debated in, and voted on by, the full Senate. It would then need to pass a House committee and floor vote in order to be sent to the governor for his signature.