Minnesota Legislation to Support Hospitals in 340-B Prescription Drug Program
A bill progressing through Minnesota's legislative process aims to ensure hospitals can continue acquiring discounted prescription medications. The state Senate recently approved the bill unanimously, with support from the DFL and eight Republicans. Introduced by Matt Klein, the bill seeks to aid over 200 hospitals participating in the federal 340-B program, which allows them to purchase drugs at reduced prices for low-income patient care.
The 340-B initiative, established over three decades ago, empowers eligible hospitals to procure medications at discounted rates directly from pharmaceutical companies. These hospitals can then charge the full market rate to insurers or governmental health programs like Medicare and Medicaid, leveraging the price difference to enhance their financial resources. According to Minnesota's Department of Health, hospitals in the state amassed more than $1.3 billion in revenue from the program in 2024.
A contentious issue within this framework requires hospitals to collaborate with multiple pharmacies to distribute discounted drugs. Some pharmaceutical companies argue they are required to offer discounts to only one pharmacy per hospital, leading to legal disputes. Recent rulings clarify that state legislation can demand pharmaceutical manufacturers extend discounts to all pharmacies collaborating with qualifying hospitals. This prompted Minnesota to consider a new law, passed by the Senate, that would uphold an existing mandate, set to expire in 2027, requiring discounts at all partner pharmacies of 340-B hospitals. The proposed law would also give the state attorney general authority to enforce compliance among drug manufacturers.
Despite Senate approval, the legislation encounters challenges in the House. Controversies include financial practices of large healthcare systems, like Fairview Health Services, which reported significant revenues from the program yet allocated a small portion to charity care. Critics, including Republican lawmakers, question whether these hospitals utilize the program efficiently for charitable purposes, also noting high executive compensation figures.
House legislator Natalie Zeleznikar, who authored the companion bill without enforcement authority, supports the 340-B program but advocates for transparency in hospital expenditures from these revenues. Efforts to integrate enforcement measures into the House proposal were unsuccessful, leaving the legislative future uncertain as discussions persist.