Michigan hospitals using federal program to markup cost of medicines, gouging patients

Hospitals across Michigan are abusing a federal program to markup medicines and boost their profits, while patients, taxpayers, and employers are forced to pay higher costs for care at increasingly expensive hospital sites. 

Congress created the “340B program” to help disadvantaged and uninsured patients get the medicine they need. The program requires manufacturers to sell medicines to hospitals at steeply discounted prices with the intent that hospitals will help these patients access more affordable medicines.

Instead, Michigan hospitals are charging everyone from uninsured patients, fully insured patients, their employers, and taxpayers drastically marked up prices for these discounted medicines and pocketing the cash.

And now, Michigan lawmakers are moving forward with legislation that continues to enable bad actors.

Instead of helping underserved patients access more affordable medicines, Michigan hospitals have marked up the price of these deeply discounted medicines and kept the profits for themselves.

• A recent, groundbreaking report from Minnesota confirms with its findings that non-profit hospitals and clinics markup medicines while raking in at least $630 million in profit. This follows a report out of North Carolina that found hospitals overcharged state employees nearly 13 times what they paid for cancer drugs.
• According to a study by IQVIA, only 1.4% of patients get a discount on their medicine filled at a pharmacy. For the rest, 98.6% of patients, hospitals and clinics have chosen not to share the discount;
• The 340B program continues to grow rapidly, far outpacing other areas of health care. HRSA reports that 340B covered entities purchased over $66 billion in discounted medicines in 2023, a nearly 24% increase from 2022. In contrast, total net spending on all medicines by insurers and patients grew just 5.6% annually over the past five years, with net prices for medicines remaining flat or declining.

This is a big problem with a simple solution: Require hospitals to pass discounts on to vulnerable Michigan patients who need them.

Hospitals claim they’re using the profits to expand care. They aren’t. According to a study published in the New England Journal of Medicine by Drs. Sunita Desai and J. Michael McWilliams:

"We found no evidence of hospitals using the surplus monetary resources generated from administering discounted drugs to invest in safety-net providers, provide more inpatient care to low-income patients, or enhance care for low-income groups."

There’s good news, though. Michigan lawmakers have the opportunity to vote NO on disastrous legislation they are considering right now that would make it easier for hospitals to pocket even more profits and continue hiding this scheme from local communities.

Michigan patients deserve better. They deserve discounts and transparency. They deserve a NO vote on HB 5350.