Health centers, rare‑disease advocates urge state action on 340B contract‑pharmacy restrictions

Witnesses before the House Health Policy Committee described how restrictions on the federal 340B drug‑pricing program are limiting health centers’ ability to use savings to support patient care.

Frank Waters of the Michigan Primary Care Association and leaders from several federally qualified health centers told the committee that contract‑pharmacy limits and frequent manufacturer rule changes have reduced 340B savings and increased administrative burden, undermining services for low‑income and underserved patients.

Waters said Michigan has 41 federally qualified health centers with about 400 locations serving close to 700,000 residents; those centers are required to serve patients regardless of insurance. Mike Weeses, CEO of Hackley Community Care in Muskegon, said Hackley serves roughly 23,000 patients at 26 locations and experienced significant operating losses in 2024. He testified that 340B savings helped offset those losses and that Hackley now employs multiple staff solely to monitor manufacturer restrictions. “If there’s no action, we will be faced with staffing reductions,” Weeses said, listing likely cuts such as mobile units, outreach and non‑reimbursable services.

Kelly Pardee and other pharmacy directors for Great Lakes Bay Health Centers described contract‑pharmacy limitations that require health centers to designate a single contract pharmacy for 340B eligibility. They said when patients fill prescriptions at other pharmacies the centers do not receive 340B savings. Great Lakes Bay described delivering about 800 medications per month and providing nearly 24,000 rides to appointments last year; staff said those services and community health workers are funded in part by 340B savings and are not otherwise reimbursable.

Representatives of the newly formed Michigan Rare Coalition, including Leslie Baldwin and Kathy Lewis, urged that 340B reform include patient‑level transparency and protections for rare‑disease patients. Baldwin said current reporting does not make clear how hospitals and other 340B entities allocate savings to charity care or low‑income assistance, and she asked for reporting that breaks down which patient groups benefit. Lewis urged requirements that hospitals demonstrate how 340B savings directly reduce patient costs or fund charity care.

Committee members asked about trends and drivers of 340B dollar growth. Witnesses said health‑center 340B savings in some centers have declined in recent years due to manufacturer restrictions even while industry‑wide 340B dollars have risen because of high‑cost specialty drugs used by hospitals. Waters and others recommended state‑level action to limit the contract‑pharmacy restrictions; they noted some federal proposals have stalled and that multiple states have pursued state‑level approaches.

No committee action was taken on legislation during the hearing; members requested further information and invited continued stakeholder engagement.