MI: SB1179 Opposition Testimony
Dear Chair Singh and Members of the Senate Oversight Committee:
Michigan has an opportunity to be the country’s foremost pioneer on health equity. But, it will take setting the rhetoric aside, bringing together unique coalitions, and gathering problem solvers to focus on the right solutions in the right ways.
As you know, the federal 340B Drug Pricing Program was meant to help low-income people afford their medicines—with discounted prices and charity care offered through “covered entities” to which the pharmaceutical companies are mandated to provide drug price discounts. Unfortunately, with little to no oversight, the financial benefits of the 340B discounts are not being passed on to those for whom they were intended, and the benefit is accruing almost entirely to hospital systems and pharmacy executives.
Patients’ out-of-pocket costs and total cost of care keep increasing, and the profit derived from the 340B program has become a major revenue source for providers, with little to no cost savings for patients, and far too little charity care being provided to those who need it.
340B is often talked about as if it is an entitlement program aimed at ensuring access for those most in need, but it operates completely unlike one. As a result of a lack of oversight and an abundance of ambiguity in the 340B law, covered entities are allowed to gouge insurance payers, including Medicare and Medicaid, as well as state employee health plans, and patients are not receiving the benefits to which they are entitled.
This is where you have an opportunity to lead.
Michigan could request a waiver from the federal government to reform 340B in these positive ways:
Require 340B “covered entities” to provide detailed financial statements to the State Auditor delineating the dollars received through the 340B program and where those dollars were spent.
Clearly define what a 340B-eligible patient is in the State of Michigan—e.g., a patient at or below 200% of the federal poverty level.
Require that covered entities funnel 340B dollars to eligible patients and demonstrate publicly that it happens and precisely how.
Currently, in the lame-duck session, SB1179 is being heard and debated. While well-intentioned, it is a bad bill that misses the point and misses the opportunity in that it would expand the 340B program in Michigan without making thoughtful key reforms. Thus, this bill as currently drafted would simply expand the problems associated with its lack of oversight while failing to provide more charity care and lower drug prices, which is what everyone really wants.
It’s time to take a pause on SB1179, think about how to reform the 340B program in Michigan during the next legislative session, request a waiver from the feds to craft real reforms like those we’ve suggested and act in the best interests of patients across the state.
We would be delighted to discuss these policy points in more detail for Michigan to be the nation’s leader on health equity. In the meantime, please oppose SB1179.
Thank you,
Laura Hameed, Advisor/Director
OurHealthEquity.org
(612) 437-8836