Student health centers scramble due to prices

Students who seek contraceptive services at college and university health centers are facing sticker shock when it comes to picking up their supplies. As a result of changes to the federal Deficit Reduction Act (DRA) that were implemented in January 2007, institutions of higher education no longer qualify for special reduced pricing for contraceptive supplies. Pharmaceutical companies are charging colleges and universities significantly higher rates as a result.

Language in the legislation specifically states that "only 340B entities; intermediate care facilities for the mentally retarded; state-owned or operated nursing facilities; or any other facility or entity deemed a safety net provider by the Secretary of the Department of Health and Human Services will be eligible" for nominal pricing.1 Title X-funded programs fall under the 340B Drug Pricing Program, which is named after a section of the Public Health Service Act and run by the Office of Pharmacy Affairs. Under 340B pricing, pharmaceutical companies are required to abide by a price ceiling that is discounted from their private-sector prices.2

For many years, some pharmaceutical companies have been willing — but certainly not required — to extend nominal prices to facilities, explains Marilyn Keefe, interim president and chief executive officer of the National Family Planning and Reproductive Health Association (NFPRHA). "Under the new language, pharmaceutical companies have little incentive to continue to extend nominal pricing to facilities that don't qualify for 340B pricing," she reports. "If a manufacturer continues to sell nominally-priced drugs to nonqualified clinics, their commercial 'best price' would be lowered, and the amount of Medicaid rebates that they have to pay would be increased."

In the case of student health centers, the impact has been two-pronged, says Mary Hoban, PhD, CHES, staff liaison for the American College Health Association (ACHA), which is monitoring the situation. Students are returning for prescription refills to find that the cost of a pack of branded pills has doubled, and student health center administrators are grappling with substituting generic products, which are not available for all contraceptive methods. While generic products may be less in price than branded drugs, their costs still are higher than what was available with nominal pricing, Hoban states.

When student health centers were able to purchase contraceptives at nominal pricing, some facilities charged a dispensing fee, which was used to fund or supplement such programs as condom distribution, screenings, and other education projects, says Hoban. To help keep contraceptive prices affordable for students, such fees may not be recouped, meaning lost revenue for the centers, she explains. Some services may have to be cut, or student health fees will need to be increased, says Hoban.

Pills are now costing from $35-$55 for a 28-day cycle; 13 cycles of pills in the course of a year costs a lot of money ($455-$715), says Robert Hatcher, MD, MPH, professor of gynecology and obstetrics at Emory University School of Medicine in Atlanta. Even if a college student has insurance, she is likely to pay $10-$25 a cycle for her pills, he notes.

"The efforts to retain nominal prices for clinics are to be applauded because one response to the very high price of pills is for women to stop pills for several months when they cease to be in a sexual relationship," says Hatcher. "Taking a break from pills for financial or any other reason is a recipe for unintended pregnancy."

Clinics feel pain, too

The DRA definitely affects entities beyond university health centers. NFPRHA is working on the issue, reports Keefe.

"The Deficit Reduction Act provision that went into effect on Jan. 1 of this year regarding 'nominal pricing' [defined as less than 10% of Average Manufacturer's Price] is having a major financial impact on hundreds of family planning providers across the country, an impact that was wholly unintended by Congress," says Keefe. "While some clinics were able to purchase a few months' supply to stave off financial hardship, these supplies will soon run out for many."

For those clinics, the prices paid in 2006 could increase by more than 600%, costs such providers can't even come close to absorbing, states Keefe. Some clinics may be forced to "script out," meaning they will give a prescription to low-income clients who may or may not have the resources to fill it, says Keefe.

Advocacy now in action

What is the next step? The ACHA board of directors met with members of the Senate Finance Committee and other federal legislators during its annual Capitol Hill visit to discuss the matter, says Hoban. At press time, the association also planned to submit comments to the Centers for Medicare & Medicaid Services (CMS), which will oversee the final implementation of the DRA Medicaid pricing ruling. Deadline for public comment on the CMS ruling was Feb. 20, 2007.

Changing the ruling is seen as the most expeditious form of action, says Hoban. It would grant college and university health centers an exception to participate in the nominal pricing plan, she explains. If the ruling isn't changed, legislative action will need to be pursued, representing a more lengthy process, says Hoban.

NFPRHA is working with health care providers and members of Congress to ensure that companies can continue to have the option to sell birth control products to family planning clinics at nominal prices, says Keefe. While there have been few legislative vehicles to attach such a change since Congress went into session, advocates are hopeful that the language will be fixed in the coming months, she notes.

"After all, it is the kind of fix that members can feel good about; it costs nothing, lowers costs to the health care system overall, and was an unintended consequence of a complex and poorly understood law," says Keefe. "There also are ongoing efforts to find an administrative fix by clarifying that non-340B family planning clinics are 'safety net' providers whose prices should continued to be excluded from the calculation of Medicaid 'best price.'"


  1. 109th Congress. Deficit Reduction Act of 2005, Pub. L No. 109-171, 2006.
  2. Sonfield A. Summer price spike: A case study about publicly funded clinics and the cost of contraceptive supplies. Guttmacher Policy Review 2006; 9:2-5.