Hearings to examine the 340B program, focusing on examining its growth and impact on patients.

Committee on Education

2025-10-23

Source: Congress.gov

Summary

The Senate Committee on Health Education, Labor, and Pensions convened to discuss the 340B drug discount program, intended to make healthcare more affordable for low-income and uninsured patients . The discussion highlighted significant concerns about the program's growth and impact on healthcare costs, while also acknowledging its vital role for safety-net providers [ 00:26:26 ]

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. Members expressed a dual desire to reform the program to align with its original intent and to protect its benefits for vulnerable communities .

Themes

Growing Costs and Misaligned Incentives of the 340B Program

The 340B program has experienced significant growth, leading to increased healthcare costs for patients and taxpayers . This growth is attributed to factors like vertical integration in healthcare, expanded eligibility, and relaxed rules on contract pharmacies . Concerns were raised that the program incentivizes physicians to prescribe more expensive drugs and healthcare systems to consolidate, driving up costs within Medicare, Medicaid, and commercial insurance markets [ 00:17:00 ] . Investigations revealed that a substantial portion of 340B revenue goes to for-profit middlemen, and patients do not always directly benefit from the discounts [ 00:19:22 ] . This situation has led to calls for reform, including addressing the lack of clear guidelines on patient benefits and requiring entities to report how 340B revenue is used .

340B as a Crucial Lifeline for Safety Net Providers

Despite its issues, the 340B program is viewed as critical for supporting rural hospitals, community health centers, and other safety-net providers [ 00:26:26 ]

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. These entities rely on the savings from 340B to expand services, including dental, behavioral health, and maternal care, and to lower out-of-pocket drug costs for patients . For many providers, especially in rural and underserved areas, 340B revenue is essential for their operational sustainability and ability to provide uncompensated care . Without these savings, many fear that crucial services would disappear, exacerbating healthcare access issues for vulnerable populations .

Calls for Reform and Enhanced Oversight

There is a consensus on the need for reform to ensure the program meets its intent of supporting vulnerable communities . Key areas for reform include increasing transparency on how revenue is generated and spent, improving HRSA's oversight capabilities, and placing limits on contract pharmacies, particularly those in affluent communities . The Government Accountability Office (GAO) has made 20 recommendations since 2011, but only five have been implemented, highlighting HRSA's limited enforcement authority . A bipartisan working group is actively exploring legislative solutions to increase transparency, strengthen oversight, and address issues like duplicate discounts and patient definitions .

Broader Healthcare Context and Financial Pressures

The discussion often intersected with broader concerns about the state of healthcare in the U.S., including potential government shutdowns, expiring Affordable Care Act (ACA) premium tax credits, and proposed cuts to Medicaid [ 00:26:50 ]

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. Many participants argued that these external pressures threaten to destabilize the healthcare system, leading to higher premiums, millions losing insurance, and increased strain on safety-net providers [ 01:02:22 ]

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. High prescription drug prices, patent abuses by pharmaceutical companies, and market consolidation were also cited as significant issues contributing to the unaffordability of healthcare [ 01:39:44 ]

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.

Tone of the Meeting

The tone of the meeting was concerned and urgent, reflecting a shared recognition of systemic problems within the healthcare system and the 340B program . It was also notably contentious at times, particularly when addressing broader healthcare funding and legislative actions, with stark partisan divisions emerging on the causes and solutions to rising healthcare costs and insurance accessibility . Despite these disagreements, there was an underlying push for bipartisan collaboration on 340B reform, with acknowledgments of ongoing efforts to find common ground .

Participants

Transcript

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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