May 8, 2024

Minnesota State Capitol
100 Rev. Dr. Martin Luther King Jr. Boulevard
Saint Paul, Minnesota 55155

Dear Senator,

On behalf of 32,616 members and supporters of the Council of Citizens Against Government Waste (CCAGW) in Minnesota, I urge you to support the removal of Article 6, Section 3, lines 83.6 through 83.17, from SF 4942 which includes a manufacturer mandate for the federal 340B drug pricing program in Minnesota, during the committee conference process, and instead urge Senate conferees to accept the House version of the legislation, which does not include a 340B manufacturer mandate.  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 not include provisions like a manufacturer mandate.

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 that you request Senate conferees to eliminate language requiring a manufacturer mandate for the 340B program in Article 6, Section 3 of SF 4942 and instead call on 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