Overview:
The federal 340B Drug Pricing Program provides health centers access to outpatient drugs at a reduced price. While every health center decides how its 340B savings can best benefit its patients, these savings often support clinical pharmacy programs, extended evening and weekend hours, case management services for at-risk community members, and sliding fee discounts for healthcare services– ultimately increasing patient access to care.

The Challenge:
Many pharmaceutical manufacturers have made it more difficult for 340B entities like health centers to benefit from the savings associated with discounted drugs. They do this by restricting the number of 340B contract pharmacies to which discounted drugs can be distributed.

The Basics:

  • Health Centers are the safety nets for their communities.
  • The 340B program is critical to help providers stretch their limited resources to better serve their vulnerable communities.
  • Health Centers are dedicated to increasing transparency.
  • Limitations of contract pharmacies will restrict patient access to discounted
    medications and cause them to travel further to obtain their medications.

Recommendation:
MPCA recommends supporting HB4878 which will prohibit pharmaceutical manufacturers from limiting health centers’ (and other 340B covered entities’) use of critical contract pharmacy arrangements. The passage of HB4878 will ensure access for underserved Michiganders who may otherwise struggle to acquire the medications they need.

 

FAQs and Additional Context :

Our Ask:

  • Please pass HB4878 out of Committee, to ensure that Michigan residents can continue to receive high quality, cost-saving, healthcare and restore stability to safety-net organizations in Michigan.
  • We are only asking that manufacturers uphold their side of the 340B agreement as they did for the first 28 years of this program.

 

Why Michigan needs you to take action:

  • Savings from the 340B program provide healthcare for many patients in the form of medication access, primary care, emergency care, dental care, and much more. The services and programs provided vary by the type of Covered Entity, their patients’ needs and the needs of their community.
  • Many Covered Entities and FQHCs are approaching critical status due to this loss of funding.
  • Losing primary care and emergency care services is not something Michigan can afford to do.
    • If manufacturers are allowed to continue circumventing these discounts, FQHCs will have to keep reducing staffing and eliminating cost reducing healthcare services.
    • Our communities will have worse health outcomes and fewer jobs unless action is taken now.
  • Each state is different in terms of how they utilize and implement federal programs (especially healthcare programs like Medicaid and 340B).
  • It is completely the State’s responsibility and the State’s right to decide what implementation is in their best interest.

 

Synopsis of the 340B Program:

  • The 340B Program is an agreement between Manufacturers, CMS (Medicare & Medicaid), and Covered Entities.
    • If a Manufacturer sells their medications to Medicare or Medicaid, they must agree to:
      • Give a discount on their products sold to Medicaid.
      • Give a discount on their products sold to Covered Entities.
  • If Covered Entities participate in the 340B program, they must agree to:
    • Keep providing the healthcare services to the patients that qualified them for 340B.
    • Use the savings for the intent of the 340B Program.
    • Conduct routine audits (by Manufacturers, HRSA, Insurers, Annual External Audits) and numerous other routine compliance measures.

 

Intent of the 340B Program & Which healthcare providers are in the 340B Program:

  • The 340B program was created in 1992 to provide non-taxpayer funding for “Covered Entities”.
    • It is a government organized program, not a government funded program.
    • 340B savings are NOT taxpayer dollars or government funded.
      • Passing H.B. 5350 would not impact Michigan’s budget (or the Federal Budget).
      • As HRSA stated in the Federal Register, the 340B Program “enables covered entities to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services”.
      • Covered Entities are generalized as healthcare providers who serve underinsured patients or function as a safety-net organization (i.e. DSH Hospitals, Rural hospitals or Federally Qualified Health Centers/FQHCs)

 

What is Causing the Crisis for Michigan Healthcare Providers?

  • For the first 28 years of the 340B Program, everyone kept their agreements.
    • Manufacturers allowed wholesalers to ship their medications to Covered Entities wherever they served their patients. They shipped to those who hired staff for their own pharmacy, and those who hired existing pharmacies where their patients were already going (contract pharmacies).
    • Covered Entities kept providing healthcare to their patients while functioning as a safety-net for our healthcare system, even during pandemics, even as drug prices and the cost of healthcare kept rising.
  • Starting in 2020, manufacturers decided they would put restrictions on Covered Entities and only give discounts on their medications that were shipped directly to a Covered Entity owned address (and not someone hired by a Covered Entity, i.e. a contract pharmacy).
    • HRSA (who oversees and implements the 340B program) told Manufacturers it was a violation of the 340B Statute. However, HRSA was essentially deemed to not have the authority to enforce their opinion.
    • At an accelerating pace since 2020, more manufacturers implemented increasingly restrictive policies; essentially not holding up their end of the 340B agreement.

 

Which states have enacted protections similar to HB4878?

  • Arkansas, Colorado, Hawaii, Kansas, Louisiana, Maine, Maryland, Minnesota, Mississippi, Nebraska, New Mexico, North Dakota, Oklahoma, Oregon, Rhode Island, South Dakota, Tennessee, Utah, Vermont, West Virginia.

 

Which states have introduced and/or passed bills similar to HB4878?

  • California, Connecticut, Georgia,  Iowa, Kansas, Massachusetts, Michigan, New York, Ohio, Texas.