Olympic Medical Center is facing a multimillion-dollar setback after losing access to the federal 340B Drug Pricing Program, just months after securing a property tax levy that nearly doubled its local funding. Sources say the loss—linked to a change in patient mix—will derail plans for a new in-house pharmacy and slash savings used for patient care. The development comes amid repeated state health citations and growing concerns over transparency.
Clallam County voters approved a major levy lid lift for Olympic Medical Center (OMC), nearly doubling the hospital’s property tax funding from around $6 million annually to roughly $12 million. Voters were told this boost was essential to protect services, address staffing shortages, and improve patient care.
But in the months since, information has surfaced—confirmed by multiple sources close to the organization—that OMC has lost its eligibility for the federal 340B Drug Pricing Program, a loss with potentially staggering financial consequences. Estimates from informed contacts put the impact at 9 million per year in lost drug savings.
What is the 340B program?
The 340B Drug Pricing Program, created in 1992, requires drug manufacturers to offer significant discounts on outpatient medications to certain qualifying hospitals and clinics that serve a high proportion of low-income patients. These savings can be 20–50% off retail costs and often help hospitals fund critical services.
Eligibility hinges on the hospital’s Disproportionate Share Hospital (DSH) percentage—a ratio heavily influenced by the mix of Medicare and Medicaid patients. If the DSH falls below federally set thresholds, the hospital loses access to the program.
That’s what happened to OMC. The organization no longer meets the threshold, meaning it must now purchase outpatient drugs at full market prices. The timing couldn’t be worse—especially since OMC had planned to use 340B pricing to support a new in-house pharmacy in the former Wells Fargo building, potentially competing with local chains like Walgreens and Rite Aid. That plan is now shelved.
A transparency problem
This development comes as OMC has been under state scrutiny. The Washington State Department of Health has cited deficiencies since February, and the hospital has reportedly failed inspections three times in a row.
Yet, in public communications to voters, OMC leadership painted a different picture. Just one month ago, their official timeline showed the hospital was at the stage of “discussing whether to continue the partnership exploration process by negotiating one or more letters of intent”—to be followed by a due diligence phase. There was no mention of ongoing Department of Health citations, no warning about the looming loss of 340B status, and no clear disclosure of the financial hit the community would face.
The cost to the community
Losing 340B status means millions less in hospital savings, fewer resources for patient care programs, and potentially higher costs for patients. And it comes after residents were asked to pay double in OMC-related property taxes compared to before the levy.
For a public hospital district, transparency isn’t optional—it’s a duty. The public deserves to know not just the good news, but the challenges and risks their hospital is facing. Without that, voters can’t make informed decisions about funding, governance, or the future of their community healthcare system.
OMC may have secured more local tax revenue, but losing the 340B program is a multimillion-dollar setback that could have been mitigated—or at least openly discussed—before the levy vote. The community is now left to pay more while receiving less, and trust will be hard to rebuild without a commitment to full disclosure going forward.
Meet me at the fair
Visit the Clallam County Watchdog booth at the fair — all 4 days starting today!
Work your way to Booth #60, behind the carnival near the west entrance. Stop by to say hello, chat about county issues, share a tip, or just connect with fellow community members.
Share this post