January 27, 2026
Michigan House of Representatives
Health Policy Committee
Room 519, House Office Building
124 North Capitol Avenue
Lansing, Michigan 48933
Dear Representative,
On Wednesday, January 28, 2026, the House Health Policy Committee will hold a hearing on HB 4878. On behalf of the 10,125 members and supporters of the Council for Citizens Against Government Waste (CCAGW) in Michigan, I urge you to oppose HB 4878, which will change how the federal 340B Drug Pricing Program operates in Michigan and increase government waste and mismanagement.
To participate in Medicaid, Section 340B of the Public Health Service Act requires drug manufacturers to help federally funded clinics and public hospitals that serve a large uninsured population cover the cost of drugs and provide discounts to patients. However, the lack of a clear definition of an eligible patient, along with poor oversight, have led to the program being exploited by hospitals and contract pharmacies to generate millions of dollars in profit. A September 9, 2025, Congressional Budget Office (CBO) report showed how the nationwide costs of the 340B program rose from $2.4 billion in 2005 to $6.3 billion in 2023. The 340B program costs Michigan’s employers and workers $238 million in foregone rebates annually and costs Michigan’s taxpayer-funded public employee health insurance plans an additional $34 million per year.
A September 21, 2025, Wall Street Journal editorial described how well-financed 340B hospitals use 340B discounts to finance the acquisition of competing providers that are not eligible for 340B discounts, which increases healthcare market consolidation and raises costs for insurers and patients. Since 340B is a federal program, essential reforms like a clear definition of eligible patients should be enacted by Congress. The states can play a key role in requiring greater transparency and accountability for program expenditures, but the transparency provision included in HB 4878 would bring transparency in name only as it requires reporting total 340B discounts only at the aggregate, statewide level and does not require each participating hospital and pharmacy to disclose its 340B profits, allowing them to continue to evade accountability for their 340B expenditures.
On November 25, 2024, the Minnesota Department of Health (DOH) issued the first state-level report on how the program works in a state. Hospitals in Minnesota received at least $630 million in 340B revenue in 2023. The largest hospitals, which equal 13 percent of the participating hospitals, received more than $500 million, or 80 percent of the revenue. The highest profit from 340B was $129 million at M Health Fairview University of Minnesota Medical Centers. The Minnesota DOH report should be a wake-up call not only for Congress to reform 340B by requiring verification of patient eligibility and disclosure of 340B profits by each participating entity, but also for states like Michigan to forgo expanding the program until they analyze how it is impacting patients and taxpayers within their borders. Michiganders deserve at least the same level of transparency provided by the Minnesota DOH, which would not be provided by HB 4878.
Rather than expanding 340B and increasing wasteful spending in Michigan, I urge you to contact your congressional delegation and ask them to reform the program. Again, I ask that you oppose HB 4878.
Sincerely,
Tom Schatz
President, CCAGW