Rising health care costs have crippled small businesses and working families. The crisis demands systemic change; on this, most Republicans and Democrats agree. And yet, special interest groups refuse to read the room, shamelessly pushing for legislation that further floats major corporations’ finances while drowning locals in hardship.

Utahns deserve a life raft. Senate Bill 69 tosses a microwave instead.

On the surface, the bill seems fair enough: Hospital sees a profit increase without a state tax hike. But profits need to come from somewhere. By expanding the federal 340B prescription drug program, the bill increases drug costs for Utah residents and businesses while benefitting the major chain pharmacies and pharmacy benefit managers (PBMs) who have long enriched themselves in the shadows of our health care system.

Corporate interests raiding patients’ wallets is one of the biggest reasons why the health system has eroded. S.B. 69 would worsen it.

For context, a newly published study found the 340B program raised 2023 costs for employee-sponsored health plans by $6.6 billion across the country — and that’s without the sort of expansion S.B. 69 suggests. Costs for state and local government plans increased by $1.1 billion that same year, according to the report.

340B was not always a four-letter word. In 1992, Congress enacted the program to support low-income patients and safety-net hospitals by requiring pharmaceutical companies to offer Medicaid drug discounts to underserved communities. Unfortunately, the program did not include any guardrails to prevent abuse and has not been updated in the three decades since.

Hospital systems, including those in Utah, exploit 340B by purchasing discounted drugs, selling them at inflated prices and retaining the profits rather than invest the savings to help patients. Tragically, 340B hospitals are not required use the savings to help low-income or uninsured Utahns. They can inflate drug costs at the pharmacy counter, leaving families and small businesses to foot the bill.

S.B. 69 won’t increase transparency on how 340B savings are spent. It seeks only to worsen the status quo by codifying existing abusive practices into law.

When corporate hospitals accept a 340B discount, they don’t simply mark up the drug price. They prevent employers and state plans from receiving the standard prescription drug rebates offered by the drug manufacturers. This cost Utah employers more than $95 million in lost savings and Utah’s state and local governments another $13 million in 2023, according to the report. The study found 340B’s growth could push these costs to nearly $188 million and $26 million, respectively.

Abuse related to 340B is nothing new. In 2018, the average profit margin on 340B medicines for contract pharmacies, like those named in S.B. 69, was 72%, generating an estimated $13 billion in gross profits. Employers and patients bear an estimated 27% of the profits that 340B-covered entities generate via higher insurance premiums and higher prices for cash-paying patients.

Washington is aware of the mess it created. The U.S. Senate Committee on Health, Education, Labor & Pensions is currently investigating the practices by which health care entities generate 340B revenue. It would be unwise for Utah to expand a failing program and opportunistic to do so before a federal investigation is complete.

About $66 billion in discounted drugs flow through 340B each year. S.B. 69 would egregiously expand the monstrous mess locally, hurting small businesses and taxpayers.

Utahns deserve better.

Gentry Collins is CEO of the American Free Enterprise Chamber of Commerce.