House Health Policy Committee Hears Testimony on HB 4878, Holds Bill; Debate Focuses on 340B Reporting and Contract Pharmacy Rules

Chair Vanderwall opened the hearing on House Bill 4878 and said the committee would take testimony only, noting that he did not intend to vote the bill out of committee at the meeting and expected the measure to be held for further work.

The bill as described by the chair would require 340B entities to report ‘‘money in, money out’’ details: how much they receive through the program, how much they pay contracted pharmacies and consultants, their 50 most‑frequently dispensed drugs and total profit, and how much they spend on community investments such as subsidized care, financial assistance, education, research and Medicare and Medicaid shortfalls. The chair said the bill also would require that “the money made through this program must be used for patient services” and would codify the federal rule that prevents duplicate Medicaid discounts for the same drug.

Why it matters: The 340B program lets qualifying hospitals and covered entities purchase certain drugs at steep discounts; supporters say those savings sustain services in rural and safety‑net settings, while critics contend parts of the program have been leveraged for profit by hospital systems and third parties. Testimony at the hearing highlighted competing claims about who benefits, how widely discounts are shared with patients, and whether state law can and should mandate aspects of a federal program.

Supporters’ case: Hospital systems, federally qualified health centers (FQHCs) and patient‑advocacy groups told the committee the program funds essential services in underserved areas. Chip Faley of Bronson Healthcare Group described how 340B savings support services such as patient assistance, oncology medicines for uninsured patients and local outreach clinics. Faley said the program ‘‘was designed with clear and compassionate intent to help covered entities stretch their limited federal resources’’ and gave a local example of a community outreach day where free mammograms led to follow up care for women with suspected breast cancer.

Frank Waters of the Michigan Primary Care Association and Kelly Pardee of Great Lakes Bay Health Center, speaking for FQHCs, said community health centers rely on 340B revenue to provide care that is otherwise unreimbursed or under‑reimbursed. Pardee said her center provides ‘‘2,200 rides for patients on average in a month’’ and makes free prescription deliveries; she told the committee that without 340B funds those services would be in jeopardy. FQHC witnesses also said contract‑pharmacy restrictions from manufacturers have reduced their 340B savings year to date and decreased their capacity to serve patients.

Opponents’ case: Pharmaceutical manufacturers, industry groups and some policy advocates opposed portions of HB 4878. Morgan Halloran, director of state policy for PhRMA, said in testimony that ‘‘PHRMA opposes HB 4,878 because it locks in what we think is exactly broken in the program and enshrines in state law mechanisms that ensure continued exploitation of the program that generates significant profits for large tax exempt hospital systems, pharmacy benefit managers, chain pharmacies, and other third party actors at the expense of patients.’’

AbbVie’s state government affairs director, Emily Ghibellina, told the committee the company paid about "$306,000,000" in 340B discounts in Michigan in 2024 and that in 2025 AbbVie had paid "$235,000,000" year to date and was on pace for nearly "$400,000,000." She argued manufacturers lack claims‑level data to verify which prescriptions qualify for 340B discounts and warned that the bill’s language could conflict with federal court precedent allowing manufacturers to impose ‘‘reasonable conditions’’ on 340B offers.

Policy and fiscal evidence offered: Witnesses and committee members cited several studies and federal actions. Opponents and some independent analysts cited the Congressional Budget Office (CBO) report that linked program growth to higher state‑level costs and estimated parts of spending growth were driven by contract‑pharmacy arrangements. Proponents cited HRSA audits of covered entities and urged that aggregated, de‑identified reporting would increase transparency without exposing individual hospitals. Testimony included numerical claims: witnesses said contract‑pharmacy restrictions had cost Bronson between "$10–20 million" annually and Corewell about "$40 million" since 2020; one witness said two large institutions accounted for "61%" of AbbVie discounts in Michigan; a figure of "$87,970,000" was cited as the 2024 Medicaid cost related to lost rebates.

Committee action and next steps: The committee did not vote on HB 4878. Chair Vanderwall said he intended to take testimony only and that the bill ‘‘will be holding it here in committee’’ for further work. The committee did adopt the minutes of the Sept. 17 meeting on a motion by Representative Meerman (no objection) and later excused absent members on a motion by Representative Thompson (no objection). No formal vote was taken on HB 4878 at this hearing.

What remained unresolved: Witnesses disagreed about whether state law can or should impose delivery or contract‑pharmacy requirements on a federally administered program, and several testifiers urged changes in the bill’s reporting structure. Opponents argued the bill gives the hospital trade association (the ‘‘qualified hospital organization’’ in the draft) too much control over the reporting process and shields individual hospital practices from public scrutiny; supporters said aggregated, de‑identified reporting balanced transparency and confidentiality concerns and would let covered entities ‘‘brag about the impact they have on their communities.’’

The committee held the measure for further work; no further dates were announced at the hearing.