Hearings to examine the 340B program, focusing on examining its growth and impact on patients.
2025-10-23
Source: Congress.gov
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The Senate Committee on Health Education, Labor, and Pensions will please come to order. Congress created the 340B program to make health care more affordable for low-income and uninsured patients. Hospitals and community health centers that qualify are able to purchase prescription drugs at a discounted rate. It's well-intentioned, but people are judged by actions, not by intentions. Today we'll hear testimony about how the program's participation ballooned with limited oversight, raising questions about how the revenue is used and whether it is actually benefiting low-income patients. Now, anyone who says that 340B is cost neutral to taxpayers is not paying attention. As the 340B program grows, so have healthcare costs. In fact, this year, CBO reported the program's dramatic growth led to higher costs for patients and for taxpayers. I will also note a recent study by the National Pharmaceutical Council found that 340B's growth caused premiums for employer-sponsored insurance to increase an estimated $4.5 billion from 2017 to 2023. Now, let's keep our eye on the goal. Our goal is to make healthcare more affordable, but 340B is making employer-sponsored insurance, which pays for the healthcare for 150 million people less affordable. Looking at the program, the problems are clear. 340B incentivizes physicians to prescribe more expensive drugs and health care systems to consolidate and to acquire other health care systems. The financial incentives demonstrably drive up costs within Medicare, Medicaid, and the commercial insurance market. It is clear participating providers can benefit from 340B. The question is, are patients and payers? Beginning last year, I conducted an investigation into how 340B revenue is generated and used, if you will, following the money.
The investigation revealed that a significant share of 340B revenue goes to for-profit middlemen, and patients do not always realize direct benefits from the program. And let's point out, the growth of the 340B program is causing patients to pay more now for prescription drugs than they have before. It appears that the significant growth of 340B has become a means for some to pad bottom lines, but with little focus on affordability for families or for the employers helping that family pay for their insurance. Angus King once said, there's no silver bullet for reducing drug costs, but that there is silver buckshot. I told him I would never attribute that to him. I'd steal it, but I'm just, for the record, this is Angus. It's a great quote. Maybe reforming 340B is one of those silver buckshot, that if you do something positive about this, that on the margin you contribute to a downward pressure on the high cost of pharmaceuticals. If this committee is serious about making healthcare more affordable, about making drugs more affordable, about improving commercial insurance and helping the patients, Perhaps we need to reform 340B and make sure that patients are put first. Since 2011, the GAO has made 20 recommendations to improve the integrity of the 340B program. To date, only five of those recommendations have been implemented. I appreciate GAO being here today to discuss these recommendations and inform future efforts. Recently, I released recommendations to increase 340B program and transparency. These reforms include establishing clear guidelines to ensure that patients benefit directly and requiring entities to report how 340B revenue is used. We also need to examine the role of for-profit middlemen to make sure their fees are not disadvantaging patients.
340B should be about making drugs more affordable. It should not be a line item on an investor call. By the way, there are many special interests who do not want 340 reform. They profit off of status quo, fearmonger that if we touch 340 , we hurt providers to help manufacturers. This is a false choice. We can support providers in underserved communities and reform misaligned incentives in the system that manufacturers, middlemen, and providers have used to raise costs and to hurt patients' ability to pay. I want to share one anecdote. In our investigation, we found that there's a small community health center, the community health center that we want to support with 340B. that reported that the cost of compliance and fees forced upon them by the middlemen made it almost unprofitable to participate in 340B and they were thinking of dropping their participation. Middlemen making so much profit that the community health center treating the patients that this program was designed to benefit can no longer afford to participate. This is a system that has lost its way. We have a responsibility to fix the broken status quo. 340B reforms are crucial to implementing a pro-patient, pro-family agenda that lowers the cost of health insurance and pharmaceuticals for all Americans and American businesses which pay the bill for employer-sponsored insurance. I look forward to discussing these and other ideas to reform the program.
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