January 31, 2024

Senate Judiciary Committee
West Virginia Capitol, Room 208
West 1900 Kanawha Boulevard East
Charleston, West Virginia, 25305

Dear Senator,

The Senate Judiciary Committee will have a hearing on February 1, 2024 on SB325, which will make changes to the federal 340B program. On behalf of the 7,722 members and supporters of the Council for Citizens Against Government Waste (CCAGW) in West Virginia, I urge you to oppose this bill. Congress created the 340B program in 1992 to fix a problem it created only two years earlier when it implemented government set price controls, or rebates, in the Medicaid drug benefit program. As a condition to participating in Medicaid, pharmaceutical companies must partake in the 340B program by giving discounts between 20-50 percent to certain federally funded facilities and disproportionate share hospitals that receive government subsidies to treat large numbers of Medicaid patients. But the statute does not define “patient” or require covered entities to pass on drug savings to patients.

Laws like SB325 that were enacted in other states are being challenged in the courts based on concerns they violate the Commerce clause, and the federal 340B law. These state laws include Louisiana Act 358 and Arkansas Act 1103.

A September 24, 2022, New York Times article about Richmond Community Hospital in Virginia, owned by Bon Secours, found that instead of reinvesting profits from 340B drug sales into its facilities and improve patient care, the money was being used instead to invest in facilities in the city’s wealthier neighborhoods. Dr. Lucas English, who worked in the hospital’s emergency department until 2018, said, “Bon Secours was basically laundering money through this poor hospital to its wealthy outposts … It was all about profits.” Dr. Peter B. Bach, who has written about the increased number of clinics opened in wealthier areas using 340B profits, said the hospitals are “nakedly capitalizing on programs that are intended to help poor people.” The language in SB325 related to manufacturers’ obligations under the program is premature as this case and other hospitals across the country are still under federal investigation.

I urge you to contact your congressional delegation and ask them to reform the 340B program, which would include providing a clear definition of a patient. CCAGW’s preference is the patient is indigent, not eligible for Medicaid, and does not have insurance. Again, I ask that you oppose SB325.

Sincerely,
Tom Schatz
President, CCAGW