MHA CEO Report — Protecting Access to Care Through 340B

“I alone cannot change the world, but I can cast a stone across the water to create many ripples.” — Mother Teresa

Protecting access to high quality, affordable healthcare for all Michiganders is a key tenet of the MHA. Stated simply, the 340B drug pricing program, created by Congress in 1992, is absolutely crucial to our member hospitals’ ability to maintain this access. And remarkably, since its inception to the current day, it has never required any state or federal taxpayer dollars.

One of my favorite elements of my MHA job is the opportunity to travel around the state and visit with the executives, clinicians and other important employees of our Michigan hospitals. I always ask the question: “What are your highest priorities and how can we help?” One of the most consistent answers for years has been: “We need to protect 340B.” Erosion or elimination of the program would quite literally mean the closure of key service lines, or even the hospital itself, in some cases.

At a time when drug prices are the most rapidly growing expense for hospitals, the 340B program has never been more important. It acts as a force multiplier, allowing hospitals to stretch incredibly scarce resources to provide high quality care for more patients in their communities, including our most vulnerable residents. The savings created from the ability to purchase certain prescription drugs at a discount enables hospitals to keep care in the community in various ways. Examples include funding free or heavily discounted prescription drugs for patients, trauma care, care for people with HIV/AIDs, behavioral health services, oncology clinics, nursing homes and treatment for substance use disorder.

It allows qualifying hospitals, particularly rural hospitals and those serving low-income patients, to deliver care and programming based on the needs of their individual communities. Many larger 340B hospitals are academic medical centers that care for the sickest and most complex patients. They establish arrangements with pharmacies outside of their immediate geographic area so patients who travel long distances to the hospital for specialized care can still access needed drugs at pharmacies near the patient’s home.

Unfortunately, prescription drug manufacturers are working to put arbitrary limits on the 340B program at the state and federal level and Michigan hospitals are at risk of losing their ability to provide affordable, accessible care to those in need. This comes at the same time when costs for new drugs launched by pharmaceutical companies rose by 35% from 2022 to 2023 and for the first time in history, the median price of a new drug is $300,000 – more than four times the median annual household income in the U.S. These attacks will make it more difficult to administer the 340B program and unnecessarily cut needed savings that could be invested in the community. These restrictions threaten access to care by risking the closure of birthing units, nursing homes and even critical access hospitals.

The MHA and Michigan hospitals are currently advocating for the passage of House Bill 5350 to counteract these attacks. The proposed legislation would help protect the 340B drug pricing program at the state level and the healthcare cost-savings generated for hospitals and the communities they serve. We highly encourage you to use our action alert to express the importance of the program to your lawmakers as the bill currently awaits passage out of the House Insurance and Financial Services committee.

Other harmful actions by manufacturers include Johnson & Johnson’s recent attempt to institute an unapproved rebate requirement for two drugs. The MHA opposed that proposal and we’re pleased to see that our advocacy with the Health Resources and Services Administration (HRSA) and our Congressional delegation, along with other hospitals and state hospital associations from across the country, influenced Johnson &? Johnson into discontinuing their pursuit of this unauthorized plan, after multiple HRSA notices of opposition.

This specific work is just the latest example of the MHA’s long-time strident advocacy at the state and federal level related to 340B. We have engaged in the state legislature, Congress, the courts and with our MHA Service Corporation Endorsed Business Partners, demonstrating just how impactful we know this program is.

The 340B program has helped to improve the health and wellness of individuals and communities for 30 years. It operates without any taxpayer-funded support and has positively impacted millions of lives. Attempts at eroding the program would not only harm hospitals, but more importantly patients and communities. As I have often said, the healthcare ecosystem is incredibly complex and there is rarely if ever a single silver bullet solution to any aspect of our challenges. But there is no doubt that the 340B program is one of those critically important stones that creates many positive ripples.

As always, I welcome your thoughts.