This year, Michigan hospitals will continue pushing legislators to ban drug manufacturers from creating restrictions and limited-access conditions around their “340B Drug” products, which they say will preserve discounted drug access for rural hospitals.
The federal 340B Drug Pricing Program was established in 1993. According to the federal Health Resources and Services Administration, drug manufacturers participating in the Medicaid insurance program must supply outpatient drugs to 340B facilities at “significantly reduced prices.” Becoming a 340B facility depends on the number of Medicaid recipients and considerably “underserved” individuals that a hospital serves.
In a recent interview with MIRS, Laura Appel – the Michigan Health and Hospital Association’s executive vice president – said 87 hospitals in the state were 340B hospitals at the time.
She spoke to MIRS while the Senate was wrapping up its overnight, 29-hour Senate session. However, as she observed the Capitol from her office window, she admitted that one of the biggest bills MHA most wanted to be passed in the 2023-24 term was dead.
Right now, states like Arkansas, Louisiana, Mississippi and Missouri outlaw drugmakers in their state from putting up “340B Contract Pharmacy Restrictions.” On Dec. 13, the Senate passed a bill 30-5 – with three senators not voting – prohibiting manufacturers from setting up guardrails in their 340B contracts.
The Senate bill additionally heightened state reporting mandates of 340B entities and drugmakers in general. Following lame duck substitutes to the bill, it required the disclosure of any prescription drug exceeding $40 for one course of treatment, as well as experiencing a 12-month increase of more than 15 percent of its wholesale acquisition price.
“Maybe Congress was super-smart when they did this, because the 340B program has no state or federal fiscal implications because it’s completely a relationship between those hospitals that qualify for these discounts and the drugmakers,” Appel said. “But you can imagine that drugmakers are maybe not sure this is their favorite program.”
She said for many years, some of her association’s 340B entities have faced “arbitrary restrictions,” like limiting the number of pharmacies they can send prescriptions for the drugs to.
Appel claimed that drug manufacturers have their own compliance mandates for the hospitals they’re on 340B contracts with, subtracting from the discount’s benefit.
“What used to cost you $400,000 to comply with now costs you $3 million – all of that money is money that you can’t spend on patient care,” she said.
She illustrated how the discounts are used to offset costs for emergency room equipment, meeting staffing requirements and lowering out-of-pocket costs for cancer patients.
“If you have a labor and delivery program, you have to have three obstetricians on staff, which might not seem very expensive if you are…in Lansing, East Lansing…(near) big hospitals (with) lots of babies being born,” she said. “But if you’re a hospital where you deliver a baby every (three or two) days, it can be very expensive to maintain those physician services.”
She described how the discounts can free up money for other facility expenses.
A major opponent to such bans is the Pharmaceutical Research and Manufacturers of America. The trade association has argued that after buying deeply discounted medicines, large hospitals will turn around to charge uninsured patients and insurers higher prices, “pocketing the difference with little to no evidence they use that money to help patients.”
Sen. Sylvia Santana (D-Detroit) – the present-day chair of the Senate Appropriations subcommittee overseeing the state’s health department – said last month that $54 billion was spent on the 340B program last year, “and only 2 percent of those dollars actually went back into helping to support those who are underinsured or need that support for their prescription drug costs.”
“I believe that there is an opportunity at the federal level to fix this program where it should be fixed, not at the state level,” she said. “Our larger hospital systems across this country who have utilized this program have found ways to put those dollars into other areas, more (affluent) areas that are not reflective of what the program was intended to do.”
When asked about the urgency around 340B reform in Michigan, Appel described it as a preemptive strike her association wants to take. She said, little by little, the program is being eroded.
“Maybe you could think of it as a seawall to kind of help prevent (that) erosion,” Appel said. “The other thing about erosion is, after you get to a certain point, then it all kind of just starts imploding.”
This story courtesy of MIRS, a Lansing-based news and information service.