340B Drug Pricing Program in Michigan
Rising drug costs hurt everyone.
The 340B program helps ensure hospitals can keep their doors open.
As prescription drug prices continue to climb at an alarming rate across Michigan and the country, the national 340B program helps hospitals care for patients while supporting the providers and communities that rely on them.
By lowering prescription drug costs, 340B allows hospitals, especially those serving rural areas and low-income populations, to stretch limited resources and care for patients.
A Critical Lifeline for Patients and Providers
The average price of a newly launched drug has more than doubled since 2021, reaching a staggering $370,000 in 2024. In addition, some drug manufacturers have imposed restrictions that limit hospitals’ ability to access 340B discounts through local pharmacies.
With no limits on what drug manufacturers can charge, hospitals face growing pressure to afford lifesaving medications while continuing to care for every patient, regardless of their ability to pay. These actions make it harder for patients to access affordable medications.
Michigan hospitals feel this strain acutely. Michigan is one of only four states where hospitals operate with negative financial margins, meaning expenses exceed revenues. They do so as drug manufacturers’ average annual net income margin is nearly 23%.
For many hospitals, savings from the 340B program are essential to maintaining services and keeping their doors open.
What is 340B?
Created by Congress more than 30 years ago, the 340B program helps hospitals and community health centers stretch their limited resources further without using any state taxpayer dollars.
The program requires drug manufacturers to provide discounts on specific outpatient prescription drugs to eligible safety-net providers, including cancer hospitals, children’s hospitals, rural hospitals, and federally qualified health centers. These discounts help hospitals and clinics stretch limited resources without relying on additional government funding.
For these local providers, 340B discounts can mean the difference between staying open or closing their doors.
It is both the mission and legal obligation of hospitals to care for every patient who walks through their doors, regardless of their ability to pay. When drug prices soar, hospitals absorb enormous costs.
Who is a 340B Covered Entity?
The 340B drug pricing program was designed to support the healthcare providers who serve patients in the most vulnerable communities with the ability to stretch scarce state and federal resources. The program’s intent is fully realized through retention of important guideposts, like eligible covered entities. Hospitals considered covered entities include:
Cancer Hospitals
Children’s Hospitals
Disproportionate Share Hospitals*
Rural Referral Centers
Sole Community Hospitals
In addition, the program includes a number of community health centers and specialty clinics.
*hospitals serving a high percentage of Medicaid patients
How 340B Helps Michigan Communities
The savings hospitals and clinics get from the 340B program are reinvested directly into patient care and community health. Across Michigan, these investments look like:
- Financial assistance programs for low-income patients.
- Mobile health clinics that bring care closer to vulnerable communities.
- Low-cost or discounted prescription drugs.
- Support for essential services like obstetrics and mental healthcare.
Protect 340B. Put Patients Over Drug Companies.
Protecting the 340B program is critical to preserving access to care for patients, stability for hospitals and affordability for communities across Michigan.
Michigan hospitals are asking members of the House Health Policy Committee to put patient needs before drug companies and support Senate Bill 94, which would help protect the 340B program at the state level. The legislation safeguards critical cost savings that hospitals reinvest in patient care and community health.
Those interested can contact committee members through the MHA Action Alert to urge passage of SB 94 and help protect access to affordable, community-based care for Michigan residents.
For more information, contact advocacy at the MHA.