Senator Santana’s statement is as follows:
Today I rise to give my opposition to Senate Bill No. 94, not because I’m against the intent of the 340B program, but because this bill fails to address the real concerns about transparency, accountability, and most critically, ensuring that this program serves the patients who need it most. The 340B program is a federal program that was created to provide discounted medications to hospitals and clinics that serve low-income patients. It was a well mentioned effort to stretch scarce federal resources and make lifesaving prescriptions more affordable for those in need. But over the years, we’ve seen where this program has shifted away from the original mission.
The reality is that while some entities reinvest their 340B savings into patient care, too many others do not. There are no guardrails ensuring that the revenue generated is actually used to help the underserved. There are no requirements for how hospitals use the profits they make through the program. There are no rules governing how 340B entities expand, and now only 38 percent of the 340B disproportionate share hospitals are located in medically underserved areas. This means that a program that was originally designed to help vulnerable patients is now, in some ways, contributing to the very inequities it was meant to solve.
Over the last decade, the number of 340B pharmacies in disadvantaged communities has declined, while the number of high income areas has increased. That is a problem. Yet despite the serious concerns, Senate Bill No. 94 does not take the necessary steps to fix them. This bill requires covered entities to provide some disclosure. However, it can be described as anemic at best. It does not require hospitals to disclose how much revenue they generate from the program, how much is siphoned off to third-party actors, or how much is actually reinvested into patient care. Without the level of transparency, we are not ensuring that this program is working as intended. We don’t even know the full impact of the 340B program in Michigan, this Medicaid program. At the time when we should be doing everything we can to safeguard resources, our most vulnerable residents, we cannot afford to turn a blind eye to the lack of oversight in this system.
Other states are starting to examine the financial realities of the 340B program. Just last year, Minnesota released its first ever 340B covered entity report. It found that 340B providers in states generated at least $630 million in net revenue through the program in a single year. Yet the largest hospital systems which make up to 13 percent of all reported entities, took in 80 percent and that is in revenue. Meanwhile, some of the safety net clinics that serve the most vulnerable actually reported a negative net revenue because they had to make payments to third-party middlemen.
Let’s be clear. When we talk about transparency and accountability in 340B, we are talking about ensuring that the program actually benefits the patients it was designed to help. Unfortunately, Senate Bill No. 94 does not achieve that. It does not require covered entities to explain how they spend their savings, it does not ensure that 340B dollars go towards charity care, or other critical services that understand underserved patients need. It does not close loopholes that allow for bad actors to profit from the program without reinvesting in patient care. Because of these failings, it does not move us closer to a truly equitable system. I have always supported the local hospitals. I recognize the vital role they play in our communities, but I also believe that ethics and transparency should be nonnegotiable. Nobody, whether it’s the hospitals, the pharmaceutical companies, the third-party administrators, should be able to operate without accountability when it comes to a program designed to help the low-income patients.
That’s why I cannot support Senate Bill No. 94 in its current form. I hope that this bill moves forward and my colleagues in the House will take a serious look at these concerns and work to strengthen this legislation, because if we are serious about addressing systemic inequities, then we will need to ensure that programs like 340B are working as they were intended to work, not as a revenue stream but as a lifeline to patients who need the help the most.
The following bill was read a third time:
Senate Bill No. 95, entitled
A bill to prohibit hospitals from attempting to collect debts incurred when not in compliance with price transparency laws; and to provide remedies.
The question being on the passage of the bill,
The bill was passed, a majority of the members serving voting therefor, as follows: