Related:<\/p>\n
At issue are millions of dollars that flow into Michigan each year through the federal 340B program<\/a>.\u00a0<\/p>\n Created in 1992, it requires drug manufacturers to provide<\/a> deep discounts on certain outpatient drugs purchased by certain health providers such as federally qualified health centers<\/a> that serve large portions of uninsured and underinsured patients. Hospitals and other health care providers with higher-than-usual rates of low-income patients also qualify.<\/p>\n But in recent years \u2014 as the program has exploded in size \u2014 so, too, are the criticisms.<\/p>\n Just more than a quarter-century ago, 1,188 Michigan providers participated in 340B. Today, participating providers include nearly 4,000 Michigan hospitals, clinics, health departments and others, according to federal data<\/a>.\u00a0<\/p>\n Yet most patients likely never have heard of 340B, even when they benefit from it.\u00a0<\/p>\n That\u2019s because savings that were designed to keep drug costs low for providers rarely are passed onto patients, at least not directly.<\/p>\n Rather, the complex bureaucracy around 340B \u2014 according to the pharmaceutical industry \u2014 lacks guardrails, allowing it to boosts mega budgets<\/a> of large health systems.<\/p>\n \u201cIn all my years being a patient, I\u2019ve never been told I\u2019m getting a 340B discount \u2014 that I am or I\u2019m not. There\u2019s no way to know, said Leslie Baldwin, of Holt.\u00a0<\/p>\n In short, there\u2019s no way to tell if her drugs are discounted in any way and, if they are, who benefits. Moreover, while 340B providers spent more than $81 billion on 340B drugs in 2024, according to the US Health Resources & Services Administration<\/a>, there\u2019s no way to tell how much each provider received in savings, said Bret Jackson, President and CEO of the Economic Alliance for Michigan<\/a> and president of the National Alliance of Healthcare Purchaser Coalitions<\/a>.<\/p>\n One report<\/a> by the American Hospital Association puts those savings in 2022 \u2014 at least for US hospitals \u2014 at $46.5 billion.<\/p>\n Baldwin, who was diagnosed in 2009 with common variable immune deficiency<\/a>, is one of the cofounders of Michigan Rare Coalition, which has advocated for more transparency in the 340B program. In fact, she said VanderWall\u2019s legislation doesn\u2019t go far enough for hundreds of thousands patients like her with rare diseases and very expensive drug needs.<\/p>\n Baldwin said she once called the billing department of one specialty pharmacy connected with a large Michigan hospital, \u201cthey had no idea what I was talking about.\u201d<\/p>\n Savings \u201care supposed to be reducing costs for underinsured, non-insured and at-risk communities,\u201d she said.\u00a0<\/p>\n But what really happens with the dollars, she said, \u201cnobody really knows.\u201d<\/p>\n Ultimately, it\u2019s the patients that lose out, said Lisa Grabert, a health economist and visiting health policy professor at Marquette University, who has been comparing the budgets of hospitals in the Midwest.<\/p>\n \u201cIf those discounts were passed down to the patient, their drugs would be a lot cheaper,\u201d she said. \u201cUnfortunately, those discounts are not getting down to the patient level, and they\u2019re being used for other purposes.\u201d<\/p>\n Grabert found<\/a> that hospitals in Michigan that participate in the 340B program:\u00a0<\/p>\n reported about 49% more revenue than similar hospitals that do not participate<\/p>\n invested 113% more into stocks and bonds compared to non-participating hospitals<\/p>\n Provide less charity care (about 0.47%) than non 340B hospitals (0.76%)<\/p>\n Did not significantly pay workers any better than non-340B hospitals<\/p>\n Vanderwall\u2019s legislation would also require drugmakers to share with lawmakers information on drugs that cost more than $40 for a course of treatment and that had increased in price by more than 15% in a year.<\/p>\n \u201cWe have hospitals saying that the manufacturer is withholding payment,\u201d VanderWall said. \u201cWe\u2019ve got manufacturers that say hospitals are taking advantage of the system. What we need is true transparency.\u201d<\/p>\n The information also would be shared with the state Department of Licensing and Regulatory Affairs. Violators could face a fine of up to $500 each day of the infraction.<\/p>\n The House bill follows similarly written Senate Bill 94<\/a>, sponsored by Sen. Sam Singh, D-East Lansing.<\/p>\n No Michigan hospital has come under direct fire for its 340B spending, Singh notes. Transparency will clear the air, he said.<\/p>\n In fact, the 340B bill is tie-barred to Senate Bill 95<\/a>, which calls for greater transparency in drug pricing, he noted. That means both bills would need to pass before being signed into law.<\/p>\n \u201cIt\u2019s just one piece of a broader conversation\u201d about affordability, he said.<\/p>\n Sustaining necessary care<\/p>\n Grabert, the researcher, is quick to point out that her examination focused on hospitals, not smaller providers.<\/p>\n Such programs, she said, run on tiny profit margins or even losses at times, in large part because their patients are often uninsured. Moreover, they can\u2019t tap into federal funds that hospitals may access.<\/p>\n At Hackley Community Care, in Muskegon, 340B \u201ckeeps our doors open. It\u2019s that simple,\u201d said CEO Mike Weessies.<\/p>\n Consider:\u00a0<\/p>\n The 340B program meant $43,500 in savings at Hackley last year from prescriptions of Symbicort<\/a>, an inhaler for people with asthma and chronic obstructive pulmonary disease, or COPD, Mike Sonuga, Hackley\u2019s pharmacy director, said.<\/p>\n That money helped reduce the drug costs for about 30 patients who use Symbicort, he said.<\/p>\n But the savings that happen each week at this brightly lit pharmacy counter also help pay for transportation for patients who don\u2019t have it.\u00a0<\/p>\n In addition, Weessies said, the dollars helped pay for community health workers who connect patients to services outside the clinic, such as food pantries or counseling, and for medical assistants that keep the office running smoothly.<\/p>\n The savings also helped fund maternity care, a service considered a \u201closs leader\u201d because it costs more to provide care than Hackley is reimbursed, as well as some of the $1.9 million in charity care for Hackley patients with no insurance.\u00a0<\/p>\n \u201cLegislators think that (the savings) go directly to the patient themselves, but the savings we receive goes to support operations. We don\u2019t make enough money to support our patients without 340B,\u201d Weessies said.<\/p>\n Like others, Sonuga, Hackley\u2019s pharmacy director, accuses the drugmakers of making it increasingly difficult to tap into savings, shrinking the discounts, limiting options for pharmacy partnerships and stepping up \u2014 in Sonuga\u2019s words \u2014 an \u201conslaught\u201d of paperwork for each drug.<\/p>\n How does it work?<\/p>\n Hospitals, too, say 340B savings are a \u201ccritical lifeline<\/a>,\u201d especially rural facilities and those that serve a high number of low-income patients, according to the Michigan Health & Hospital Association. The program allows them \u201cto stretch limited resources and care for patients.\u201d<\/p>\n In southeast Michigan, Hillsdale Hospital buys Thrombin<\/a>, an anti-clotting drug used primarily in surgery, for a mere 3 cents a vial \u2014 a dramatic discount from its normal price tag of $121.46. Purchased hundreds of times each month, that drug alone helped the hospital save $45,898 last year, according to information hospital leaders provided to Bridge.<\/p>\n Those savings were sifted into the hospital\u2019s $92 million budget that, in turn, allowed the hospital to operate its obstetrics program that delivered 387 births, but operated at a $245,000 loss, according to hospital leaders.<\/p>\n The program also protects hospitals against skyrocketing drug costs that hospitals must absorb, said Elizabeth Kutter, senior director, government and political affairs at the Michigan Health & Hospital Association.<\/p>\n \u201cOne of the biggest challenges that we face as an industry is the complexity around hospital financing,\u201d she said. \u201cHealth care is wildly complex. Financing health care is wildly complex. The average person gets their bill or (insurance paperwork) and has a really hard time understanding what any of those things mean.\u201d<\/p>\n Hospitals lock into years-long contracts with doctors and insurers, even as they must ride out annual increases in costs. Programs like 340B, federal funding to help cover uncompensated care, and facility fees<\/a> help sustain the nation\u2019s network of hospitals against the rising costs of labor, drugs, supplies and technology, said Brian Peters, CEO of the hospital association.<\/p>\n Meanwhile, hospitals stand to lose money on expensive, but critical, services, such as maternity care and burn units \u2014 \u201cwe have to make up the money somewhere,\u201d he said.<\/p>\n It\u2019s far from an ideal system, Peters said, but losing any of those programs could topple the budgetary \u201chouse of cards.\u201d<\/p>\n (Editor\u2019s note: The Michigan Health & Hospital Association is a sponsor of Bridge Michigan\u2019s Health Watch newsletter. It had no role in the reporting, writing or editing of this article.)<\/p>\n Grabert, the researcher, and others also argue that discounts provided through 340B jack up drug prices elsewhere. While hospitals can hold onto the discounts for each drug they prescribe, they charge insurers the full rate. Insurers, in turn, ultimately pass on those costs onto other customers through cost-sharing, such as higher premiums or copays.<\/p>\n Other critics say the program drives consolidation, prompting larger providers \u2014 think large health systems \u2014 to snap up smaller practices<\/a> and specialty pharmacies<\/a> to rake in more discounts<\/a> that can be applied across their entire patient population.<\/p>\n \u201cThe bigger the hospital, the more it can consolidate and grab more 340B sites,\u201d said Jackson, at the Economic Alliance of Michigan.\u00a0<\/p>\n Grabert suggests that hospitals must provide a minimum threshold of charity care to be eligible. And Jackson, at the economic alliance, suggests that only hospitals in poorer or underserved areas be eligible \u2014 not their dozens of sites that can be located in wealthier communities.<\/p>\n \u201cIt needs to be significantly reformed and focused on the areas that need it the most,\u201d Jackson said.<\/p>\n \n\tRelated\n<\/p>\n Thank you to our Michigan Health Watch Sponsors<\/p>\n Bridge Michigan Health Watch is made possible by generous financial support from our sponsors. Sponsorship supports our independent journalism mission but does not constitute sponsor endorsement of individual articles or editorial content. Bridge Michigan journalism remains fact- and data-driven and independent at all times.<\/p>\n Please visit the\u00a0About<\/a>\u00a0page for more information and to\u00a0subscribe<\/a>\u00a0to Health Watch. Interested in becoming a sponsor?\u00a0Contact Emma Carr<\/a>.<\/p>\n Republish This Story<\/p>\n![\"A](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/05\/04062026_leslie_baldwin_RS10.jpg\")
Leslie Baldwin at home in Holt, MI, Monday April 6, 2026. Baldwin is the cofounder of the MI Rare Coalition, a group that helps people navigate rare medical conditions. (Rod Sanford for Bridge Michigan) <\/p>\n![\"headshot](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/05\/HS_VANDERWALL_0123-scaled-1.jpg\")
\u2018We need to know where the dollars are going,\u2019 said State Rep. Curt Vanderwall, a Republican from Ludington, speaking about a federal drug program, 340B.<\/p>\n![\"Inside](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/05\/04072026-hackley-health-KN-4-of-34.jpg\")
Savings on drugs distributed through the Hackley Community Care\u2019s pharmacy in Muskegon help the center balance the budget and offer extra services, such as transportation for patients or maternal health care. (Kristen Norman for Bridge Michigan)<\/p>\n![\"A](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/05\/04072026-hackley-health-KN-16-of-34.jpg\")
Medical assistants help the Hackley Community Care offices run efficiently and improve patient care, Hackley\u2019s leaders say. But employing them relies on the savings from a controversial federal drug program known as 340B. (Kristen Norman for Bridge Michigan)<\/p>\n
![\"Creative](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2025\/08\/1754973788_72_cc-by-nd-4.0.png\"\/)
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