April 26, 2024

Kansas State Capitol
Senate Ways and Means Committee
300 Southwest 10th Street
Topeka, Kansas 66612 

Dear Senator,

On behalf of 19,579 members and supporters of the Council of Citizens Against Government Waste (CCAGW) in Kansas, I urge you to accept the Kansas House Appropriations Committee’s amendment to Substitute for SB514 that eliminates proposed changes to the federal 340B drug pricing program.  The 340B program is complex and replete with wasteful spending.  As a federal program, it should be changed only by Congress, and if a state is going to enact legislation anyway, it should go through regular order and the committee process to allow for a full and open debate, rather than being added as an amendment to the state budget.

A January 2018 House Energy and Commerce Committee report on 340B identified insufficient oversight, unreliable data, and inadequate reporting requirements.  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 expanding 340B in other states 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.

For the above reasons, I ask you to accept the House Appropriations Committee’s amendment to Substitute for SB514 that eliminates any changes to the 340B program, and to instead urge Congress to adopt reforms to 340B that would restore its original intent to help patients obtain lower cost drugs rather than enrich hospitals and pharmacies at the taxpayers’ expense.

Sincerely,
Tom Schatz
President, CCAGW