CCAGW Urges Governor Reeves to Veto House Bill 728 | Council For Citizens Against Government Waste

CCAGW Urges Governor Reeves to Veto House Bill 728

State Action

April 4, 2024

The Honorable Tate Reeves
Governor of the State of Mississippi
550 High Street, Suite 19
Jackson, Mississippi 39201

Dear Governor Reeves,

On behalf of the 9,487 members and supporters of the Council for Citizens Against Government Waste (CCAGW) in Mississippi, I urge you to veto HB728, which will make changes to the federal 340B program.  This bill includes numerous provisions that should be rejected by fiscally conservative leaders.  The legislation will not reduce the cost of drugs or help patients.  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.  Changes to the program should be made by Congress, not the states.

A January 2018 House Energy and Commerce Committee report on 340B identified insufficient oversight, unreliable data, and inadequate reporting requirements.  The program’s failures were the result of several factors, including the lack of clear statutory intent and definition of an eligible patient, as well as lax requirements to report savings and how that money is used.  A November 2021 Xcenda study, “340B and Health Equity: A Missed Opportunity in Medically Underserved Areas,” provided further evidence of how the 340B safety-net program is being exploited by failing to help low income and vulnerable individuals get access to low-cost prescription drugs.  Instead, it is boosting hospitals’ coffers and their contract pharmacies’ profits that are largely located in areas that do not serve low-income people.  The healthcare data analytics firm IQVIA’s study, “The 340B Drug Discount Program Exceeds $100B in 2022,” found ongoing misuse of the funds by hospitals and contract pharmacies, and that patients are still not getting their benefits.

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.”  Laws enacted in other states that are like HB728 are being challenged in the courts based on concerns they violate the Commerce Clause and the 340B statute, like Louisiana Act 358 and Arkansas Act 1103.

I urge you to contact Mississippi’s congressional delegation and ask them to reform the 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 veto HB728.

Sincerely,
Tom Schatz
President, CCAGW

Issues/Topics: