February 20, 2024

Mississippi House of Representatives
400 High Street
Jackson, Mississippi 39201

Dear Representative,

The House Drug Policy Committee will be having a hearing on HB728, which will make changes to the federal 340B program. On behalf of the 9,487 members and supporters of the Council for Citizens Against Government Waste (CCAGW) in Mississippi, I urge you to oppose this bill, which includes numerous provisions that should be rejected by fiscally conservative legislators. 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.” States do not have the authority to determine how manufacturers participate in the 340B program, and bills with provisions like those in HB728 that were enacted in Arkansas and Louisiana are being challenged in court.

I urge you to contact your 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 oppose HB728.

Sincerely,
Tom Schatz
President, CCAGW