September 23, 2025

Michigan House of Representatives      
Health Policy Committee
Room 519, House Office Building
124 North Capitol Avenue
Lansing, Michigan 48933

Dear Representative,

On behalf of the 10,121 members and supporters of the Council for Citizens Against Government Waste (CCAGW) in Michigan, I urge you to oppose HB 4878, which will change how the federal 340B Drug Pricing Program operates in Michigan and increase government waste and mismanagement.  To participate in Medicaid, Section 340B of the Public Health Service Act requires drug manufacturers to provide drugs at discounts of between 20-50 percent to certain federally funded clinics and hospitals and the private pharmacies with which they contract to dispense these drugs.  However, the statute does not define what patients are eligible to receive 340B discounts or require participating providers to pass their drug savings on to patients.

A September 21, 2025 Wall Street Journal editorial described how well-financed 340B hospitals use 340B discounts to finance the acquisition of competing providers that are not eligible for 340B discounts, which increases healthcare market consolidation and raises costs for insurers and patients.  A September 9, 2025 Congressional Budget Office (CBO) report highlighted the costs of the 340B program, which rose from $2.4 billion in 2005 to $66.3 billion in 2023.

A February 4, 2025 IQVIA study, “The Cost of the 340B Program to States,” highlighted ongoing misuse of the funds by hospitals and contract pharmacies and found that foregone 340B rebates cost employers $238 million each year in Michigan alone and cost Michigan’s taxpayer-funded state and local public employee healthcare plans $34 million per year.  Since 340B is a federal program, essential reforms like a clear definition of eligible patients should be enacted by Congress.  The states can play a key role in requiring greater transparency and accountability for program expenditures, but the transparency provision included in HB 4878 would bring transparency in name only as it requires reporting total 340B discounts only at the aggregate, statewide level and does not require each participating hospital and pharmacy to disclose its 340B profits, allowing them to continue to evade accountability for their 340B expenditures. 

On November 25, 2024, the Minnesota Department of Health (DOH) issued the first state-level report on how the program works in a state.  Hospitals in Minnesota received at least $630 million in 340B revenue in 2023.  The largest hospitals, which equal 13 percent of the participating hospitals, received more than $500 million, or 80 percent of the revenue.  The highest profit from 340B was $129 million at M Health Fairview University of Minnesota Medical Centers.  The Minnesota DOH report should be a wake-up call not only for Congress to reform 340B by requiring verification of patient eligibility and disclosure of 340B profits by each participating entity, but also for states like Michigan to forgo expanding the program until they analyze how it is impacting patients and taxpayers within their borders.  Michiganders deserve at least the same level of transparency provided by the Minnesota DOH, which would not be provided by HB 4878. 

Rather than expanding 340B and increasing wasteful spending in Michigan, I urge you to contact your congressional delegation and ask them to reform the program.  Again, I ask that you oppose HB 4878.

Sincerely,
Tom Schatz
President, CCAGW