Newsom executive order would imperil health care for the state’s neediest residents

By Eddie Chan

As the President & CEO of North East Medical Services (NEMS), a San Francisco-based community health center, it’s my mission to ensure that NEMS is providing affordable, comprehensive, compassionate and quality health care services in a linguistically competent and culturally sensitive manner to improve the health and well-being of our community. NEMS alone serves 70,000 patients throughout the San Francisco Bay Area, many of whom have Medi-Cal or are uninsured. Many of our patients are immigrants and prefer to be served in a language other than English, and they often struggle to navigate the complex health care environment in some of the most expensive cities in California. Community clinics and health centers like NEMS form the backbone of the health care safety net in San Francisco and across the state. In fact, one out of six Californians are served by community health centers.

The savings that we receive from the federal 340B Drug Discount Program enables us to achieve our mission. The 340B program allows us to purchase drugs at significantly reduced prices, which in turn allows us to use those cost savings to provide care for low-income and uninsured individuals, expand enabling services and programs, and increase health access to the communities that we serve. In fact, in the past year, we have been able to open a new clinic to serve an underserved area of San Francisco, expand services like acupuncture, case management, and behavioral health services, and see thousands of uninsured or under-insured patients in a linguistically and competent manner. Many of these programs and services are not funded from any other sources, and 340B helps cover the cost.

As an unintended consequence of Governor Gavin Newsom’s Executive Order N-01-19, however, the 340B program would be greatly impacted. The Governor’s Executive Order requires the Department of Health Care Services (DHCS) to consolidate the pharmacy purchasing power of health centers, hospitals, and local agencies into one statewide pool by January 2021. Governor Newsom’s intent comes from a good place, and we support lowering drug prices—and expanding access to affordable health care — for all Californians. However, we believe that the pharmacy transition — as written — would jeopardize programs essential to the health of California’s most needy individuals and families. NEMS has actively advocated on this issue for the past year, but timing is critical as the pharmacy transition is scheduled to go into effect on Jan. 1, 2021.

Many may not realize or remember that NEMS was one of the first clinics to embrace and pilot the innovative universal health access program, Healthy San Francisco, which came to fruition under then-Mayor Gavin Newsom’s administration back in 2007. While we support Newsom’s vision to expand health care to all San Franciscans, Healthy San Francisco did not provide funding for direct care. Patients who could not receive health care elsewhere turned to NEMS, and in the first few years of the program, NEMS was serving 25% of all participants of the program. We could not have provided care to these clients without the savings we receive from the federal 340B program.

We strongly believe a loss of 340B savings will have a detrimental impact on health centers like NEMS, hindering us from fully serving California’s most vulnerable populations. We ask that the Governor find a way to keep the 340B program intact for health centers or help us close the funding gap so that we may continue championing health care innovations, programs, and services that make our communities healthier, stronger.

Eddie Chan, Pharm. D., is president and CEO of North East Medical Services (NEMS).

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