Black Women for Change Expresses Concern About HB5350

December 4, 2024

Michigan House Committee on Insurance and Financial Services

Dear members of the Committee,

As an advocate for advancing policies that address gender, economic and racial inequities, Black Women for Change is writing to express our concern regarding House Bill 5350.

The stated purpose of the 340B Drug Discount Program – to stretch scarce federal resources as far as possible, reach more eligible patients, and provide more comprehensive health services – is intended to advance equitable health access for vulnerable Americans, including Black women. However, today, the program often falls short for far too many in our communities in Michigan and across the country.

Rather than addressing the program’s systemic issues and increasing access for patients, HB5350 would further exacerbate these shortcomings by protecting exactly the type of profiteering of the 340B program that BWC is concerned about. We encourage the Committee and Legislature to reject this legislation and instead pursue patient-centered reforms that uphold health equity for Black women.

The 340B program was created to help safety-net providers more effectively care for vulnerable communities and low-income, uninsured, and underinsured patients. For three decades, “federal grantees” – federally qualified health centers (FQHCs), Ryan White HIV clinics, STD and family planning clinics, and others – have used 340B savings to offer uncompensated care for these communities and expand access to critical reproductive and sexual health care services. As a condition of their federal funding, these grantees must invest all of their revenue, which includes any profits generated by their participation in 340B, back into the communities they serve. As a result, these grantees continue to be exemplary stewards of the 340B program.

However, these requirements do not apply to 340B hospitals, which made up the vast majority of the $66 billion in 340B funds in 2023. Hospitals have no requirements to report how much 340B revenue they receive and how it is allocated, or to demonstrate concrete community impact through expansion of services or increased charity care. Consequently, the program has fallen short of fulfilling its original intent despite its exponential growth in the last three decades.

Aided by private data consultants, hospitals currently take advantage of this lack of oversight to capture 340B revenue from nearly any patient that walks through their doors. At no point is a patient made aware of their 340B status, making it impossible for them to receive tangible benefits from the program – especially when patients are receiving their 340B medicines at pharmacy locations that may be miles away from the hospital.

Hospital systems can expand their 340B profitability through networks of “contract pharmacy” locations. These are typically expanded into wealthy areas rather than pharmacy deserts and low-income communities. Further, there are no requirements that the steep discounts hospitals receive on 340B medicines be shared with uninsured patients at the pharmacy counter. 

Today, medical debt affects one in 12 Americans, disproportionately communities of color, people with disabilities, and other marginalized communities. Reform efforts that do not directly address patient affordability do not fix the program’s core issues. Any reform that seeks to promote health equity should require 340B medicines be provided to low-income patients at an affordable price based on a sliding fee scale in a way that is clear to patients at the clinic and at the pharmacy counter and should apply at all pharmacy locations, which HB5350 would not do.

HB5350 would merely exacerbate these concerns without meaningfully lowering costs or improving access for patients. As advocates for the communities affected by the program, we urge the Committee to reject this legislation. Instead, we look forward to engaging in conversations with lawmakers in Michigan and across the country about comprehensive solutions that thoroughly address all the program’s shortcomings by promoting transparency and accountability, affordability at the pharmacy counter, and access to critical reproductive health care services.

Respectfully,

Archbishop Marcia Dinkins

Executive Director

Black Women for Change