Hospital officials who spoke in support of Senate Bill 14 Wednesday include, from left, Angela Portman, CEO of Breckinridge Health; Nancy Galvagni, president of the Kentucky Hospital Association; Don Lloyd, CEO of UK St. Claire Regional Medical Center, and Brian Springate, CEO of Appalachian Regional Healthcare’s Hazard hospital. (Kentucky Lantern photo by Deborah Yetter)
FRANKFORT — A bill aimed at strengthening access in Kentucky to a federal program that generates income for charity health care passed a Senate committee Wednesday, with several rural hospital executives telling lawmakers it has helped keep them in business.
The program “undoubtedly saved our hospital,” said Angela Portman, CEO of Breckinridge Health Inc., a 25-bed independent hospital in Hardinsburg. “We were out of options.”
Several speakers attempted to express concerns about how Senate Bill 14 would affect the federal 340B Drug Pricing Program but were cut short by Sen. Stephen Meredith, R-Leitchfield, chairman of the Senate Health Services Committee and sponsor of SB 14.
Meredith warned beforehand he didn’t want to hear testimony about the federal program, subsidized through deep discounts from the pharmaceutical industry. Any reforms to the program overall must come at the federal level, where legislation is pending, he said.
Critics of SB 14, including a representative of the Pharmaceutical Research and Manufacturers of American, of PhRMA, came forward to testify.
“We will not have a debate on 340B today,” Meredith said. “We can’t change that. It’s federal law.”
But a national “dark money,” pro-Trump group, Building America’s Future, showed its opposition Wednesday by driving a truck with a flashing sign board around the Capitol with alternating messages including its claim that “340B is subsidizing gender transitions for kids.”
“Tell state Republican: STOP 340B,” it said, with a notice that it was “paid for by Building America’s Future.”
Supporters of the program in Kentucky have rejected that claim as baseless, pointing out Kentucky’s Republican-controlled General Assembly banned gender affirming care for minors in 2023 and the program is chiefly aimed at generating revenue hospitals and clinics use to expand health resources for the poor.
“This is a very critical program for our hospitals and access to care in rural communities,” Nancy Galvagni, president of the Kentucky Hospital Association, said at the hearing.
The outside group, which has been linked to Elon Musk, an advisor to President Donald Trump, said in a recent press release it has launched a “five-figure” television and podcast ad buy appealing to Republicans to oppose pending bills in Utah, Nebraska, North Dakota and Kentucky, describing 340B as an “out-of-control government program” that is “secretly sabotaging” Trump’s agenda.
No one from the group spoke at Wednesday’s hearing and Meredith didn’t address its claims in the 45-minute discussion of SB 14. The group has not responded to the Lantern’s request for comment.
Rather, Meredith limited discussion to SB 14, which he said would preserve benefits to Kentucky health providers.
The 340B program, authorized by Congress in 1992, was meant to aid health providers by giving them more money to help low-income patients, including providing lower cost drugs.
Created with the support of the pharmaceutical industry, it required drug manufacturers to provide drugs at discounts of up to 50% to hospitals and clinics that provide care to a certain percentage of low-income patients including those covered through Medicaid, the state-federal health plan.
Hospitals and clinics provide those discounted drugs through pharmacies, then bill insurers including Medicaid for the market price of the drugs and keep the difference — the goal being to use those resources for low-income patients.
But it has expanded rapidly over the years, aided by changes in federal law that the pharmaceutical industry and some consumer advocates argue have allowed national pharmacy chains and major health systems to benefit from 340B at the expense of consumers and low-income patients it was supposed to help.
KY health care providers depend on drug discount program that’s facing fire on several fronts
“Our members believe this bill does not protect patients,” said Russell Palk, with the Biotechnology Innovation Organization, a Washington D.C.-based trade association. “It does not lower their out-of-pocket costs.”
Meredith rejected that assertion.
“I don’t believe that’s true,” he said.
Rather, he said, his bill — similar to legislation enacted in other states — would merely prevent pharmaceutical manufacturers from discriminating against Kentucky by requiring them to provide the same drugs at the same discounts as they do in other states. As 340B has grown, some pharmaceutical manufacturers are restricting discounted drugs they will ship to Kentucky, he said.
The program provides an estimated $122 million a year in additional revenue for health care in Kentucky, he said. “Why should we not be allowed to have this funding when other states are?”
Meanwhile, hospital CEOs told the panel Wednesday that income from 340B is critical to providing patient care, especially for cancer treatment where chemotherapy drugs can cost tens of thousands of dollars.
“Cancer treatment is expensive and without the 340B program many of our patients simply would not have access to it,” said Brian Springate, CEO of Appalachian Regional Healthcare’s Hazard hospital.
SB 14 passed the committee on a 9-1 vote and now goes to the full Senate.
A similar bill last year sponsored by Meredith passed the Senate but died for lack of action in the House.