DPC Applauds Release of U.S. Senate HELP Committee Report Highlighting Need for340B Program Reform

The Domestic Policy Caucus applauds a newly released report from the U.S. Senate Health, Education, Labor, and Pensions (HELP) Committee which highlights the need for 340B program reform.

Earlier this week, U.S. Senator Bill Cassidy, M.D., Republican of Louisiana and chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, released the report detailing findings from his years’ long investigation into how covered entities (certain health care facilities or programs that serve low-income patients, as designated in law) use and generate revenue from the 340B Drug Pricing Program. Cassidy also outlined potential reforms needed to improve the program to better serve patients.  

Congress created the 340B Program in 1992 to allow covered entities to purchase outpatient drugs at a discounted rate “to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” Drug manufacturers are required to provide these discounts as a condition of participation in the Medicaid Drug Rebate Program. 

The Domestic Policy Caucus has long expressed concerns that the 340B program is failing to benefit vulnerable populations of patients as it was intended to do, and studies have backed up our concerns.  

According to a press release issued by his office, as part of his investigation into the 340B Program, Cassidy requested information from hospitals, Federally Qualified Health Centers (FQHCs), contract pharmacies, and drug manufacturers to better understand how revenue flows throughout the 340B Program and how covered entities use 340B revenue to benefit patients. He found: 

• Bon Secours Mercy Health and Cleveland Clinic, both of which are covered entities, generated hundreds of millions of dollars in 340B revenue, but do not pass 340B discounts directly to their patients. Shockingly, the two investigated hospitals saved hundreds of millions of dollars from 340B, and their executives stated that the 340B program was not designed to provide direct savings to patients. Additionally, these hospitals report using 340B revenue on “capital improvement projects” and “community benefit programs,” but do not account for what specific expenses 340B revenue goes towards.  

• CVS Health and Walgreens charge covered entities a complex range of fees for using their pharmacy services to dispense 340B drugs to patients. They also charge additional administrative fees for Third Party Administrator (TPA) services. These fees, which generally increase each year, divert resources from the 340B program’s intended purpose. 

• Drug manufacturers report significantly increasing 340B sales to contract pharmacies compared to direct sales to hospitals and grantees. Additionally, they report having difficulty taking actions that ensure 340B program integrity, such as preventing unlawful diversion to ineligible patients and duplicate discounts. 

In light of these findings, Cassidy laid out potential reforms for Congress to improve transparency in the 340B Program and ensure vulnerable patients directly benefit from revenue created by discounted drugs: 

• Require covered entities to provide detailed annual reporting on how 340B revenue is used to ensure direct savings for patients, providing a more transparent link between program savings and patient benefit. 

• Address potential logistical challenges caused by increased administrative complexity, leading to burdens that may impede patient benefit from the program. 

• Investigate the types of financial benefits contract pharmacies and TPAs receive for administering the 340B Program to ensure that increasing fees do not disadvantage covered entities and patients. 

• Require transparency and data reporting for entities supporting participants in the 340B Program (i.e., contract pharmacies and TPAs). 

• Provide clear guidelines to ensure that manufacturer discounts actually benefit 340B-eligible patients, including examining legislative changes to the definition of eligible patient and contract pharmacies’ use of the inventory replenishment model. 

Clearly, these reforms are needed, as is further investigation into the 340B program, because as Senator Cassidy has shown, transparency and accountability have been shockingly absent. 

We are grateful to Senator Cassidy for the compilation and release of this report.

We also applaud Senator Cassidy’s willingness to apply his professional perspective in the quest to bring reform to the 340B program, to inject transparency and accountability into the program, and to get the program on track to fulfill its intended purpose of providing savings for patients.

DPC Urges North Dakota Senators to Reject 340B Expansion

The Domestic Policy Caucus wrote to members of the North Dakota Senate today, urging them to vote against HB1473, which would expand the flawed federal 340B program.

In the letter, DPC wrote, in part,

North Dakota’s unique pharmacy ownership rules are just another reason you should have serious concerns about HB1473. According to the Pioneer Institute, 51% of current 340B contract pharmacies are located outside of North Dakota (of the 254 contract pharmacies, 129 are outside North Dakota). Supporting this bill will mean there will be unlimited contracts with the likes of CVS and Walgreens in Moorhead or East Grand Forks--or as far away as Hawaii. Meaning, those 340B funds meant to help North Dakotans are leaving the state. Layer that on top of what we heard in earlier testimony on this bill some days ago, where one hospital system official talked about using North Dakota's 340B funds to provide a variety of services in Minnesota...

Disappointingly, HB1473 does not have any transparency provisions, which House members had said they wanted added to the bill when they voted it out of the first chamber...

Read the full letter here.

DPC Testifies Against 340B Expansion Bill before North Dakota Senate Human Services Committee

Domestic Policy Caucus Secretary/Treasurer Kent Kaiser, Ph.D., testified virtually before the North Dakota Senate Human Services Committee on March 12 to oppose House Bill 1473, which would expand the federal 340B program in the state.

Among other points, Kaiser said, "...North Dakota's unique pharmacy ownership rules are just another reason you should have serious concerns about HB1473. According to the Pioneer Institute, 51% of current 340B contract pharmacies are located outside of North Dakota (of the 254 contract pharmacies, 129 are outside North Dakota). Supporting this bill will mean there will be unlimited contracts with the likes of CVS and Walgreens in Moorhead or East Grand Forks--or as far away as Hawaii. Meaning, those 340B funds meant to help North Dakotans are leaving the state. Layer that on top of what we heard in earlier testimony on this bill some days ago, where one hospital system official talked about using North Dakota's 340B funds to provide a variety of services in Minnesota..."

Listen to the full hearing here, with DPC testimony beginning at about 10:22:15 AM.

DPC Requests Fiscal Note on South Dakota HB154 340B Expansion

DPC wrote to members of the South Dakota House of Representatives, requesting that a fiscal note be attached to proposed legislation, House Bill 154, which ais to expand the federal 340B program in the state.

DPC wrote: 

SB154, which aims to expand the 340B drug pricing program in South Dakota, has often been touted as cost-free to taxpayers, but this is totally false.

South Dakota taxpayers deserve a fiscal note for SB 154 to understand the full and true impact this legislation would have on small business owners as well as on the state health plan.

Every time someone in the State Employees Health Benefits Program fills a 340B-eligible prescription, the taxpayers pay. Any amount that the pharmacy or hospital charges the State Health Plan above the cost to acquire the drug is a windfall provided by tax dollars. South Dakotans deserve to know exactly what their contribution is to support the 340B program in the state.

Last year, the North Carolina State Treasurer released a report finding North Carolina 340B hospitals overcharged state employees for cancer drugs and reaped thousands of dollars per claim—all at taxpayer expense. There, 340B hospitals billed the State Health Plan 5.4 times their discounted acquisition costs, collecting as much as $6,026 in average profits per claim by charging up to 12.7 times their 340B acquisition costs for oncology drugs. South Dakota taxpayers should know whether they are being similarly gouged to support the 340B program in their state.

DPC Testifies Against HB154 340B Expansion in South Dakota

Today, Domestic Policy Caucus Secretary/Treasurer Kent Kaiser, Ph.D., testified against South Dakota House Bill 154, which would expand the flawed federal 340B drug pricing program in that state, before the House Health & Human Services Committee.

In part, Kaiser testified, "The 340B program has been in existence for about 35 years. So, simply ask your constituents whether they think they enjoy more affordable prescriptions today and more help paying for their copays and coinsurance now as compared to 25 or 30 years ago. Or do they think any benefits meant for them have been diverted into other programs and things. Ask them if they have more drug store options, closer to home, to buy their medicines. Or, does it seem like they have fewer drug store options, and that they have to travel farther from home to get their prescriptions filled? Ask them if they think they receive more personal care from their pharmacy today than they did 25 or 30 years ago. Or do they think their pharmacy is more impersonal and corporate. If you receive generally negative responses to these questions, then you know that the 340B program is not working the way it was intended and that it needs to be reformed on the federal level, way before it is expanded on the state level."

Listen to the full committee hearing here (DPC testimony starts at ~41:55).

DPC Appears on WZFG Radio to Discuss HB1473 in North Dakota

On February 27, Domestic Policy Caucus Secretary/Treasurer Kent Kaiser, Ph.D., appeared on WZFG radio's "What's on Your Mind" show to discuss why North Dakota House Bill 1473, which aims to expand the federal 340B drug pricing program, should be opposed.

Show host Scott Hennen and Kaiser discussed how the federal 340B program needs to be reformed so that the financial benefits flow to patients in the form of lower drug prices and help paying prescription drug copays and coinsurance, instead of to large hospital systems and national pharmacy chains.

Listen to the show below.

The Oklahoman op-ed: “This bill was supposed to help OK patients. It fattens hospital wallets instead.”

In The Oklahoman of Oklahoma City today, Domestic Policy Caucus Secretary/Treasurer Kent Kaiser, Ph.D., has an op-ed published, asking lawmakers to reject legislation that aims to expand the federal 340B program. 

In part, DPC wrote, "[A] loophole in the law allows hospital systems and pharmacy chains to keep for themselves the financial benefits that are meant for patients. Obviously, this well-intentioned but seriously flawed program needs to be fixed, and expanding it is not the answer to prescription drug affordability in Oklahoma."

Read the op-ed here.

New Domestic Policy Podcast Episode: The Folly of 340B Expansion in North Dakota

In a new Domestic Policy Podcast episode released February 20, Dr. Kent Kaiser and North Dakota Watchdog Network Managing Director Dustin Gawrylow discuss the folly of North Dakota House Bill 1473. The bill aims to expand the federal 340B drug pricing program in the state.

During the episode, Gawrylow said, in part, “Like most government programs, this is one of those that had a good initial intention, but government is really bad at making sure that the programs that it develops actually benefit the people it intends to benefit. This is definitely one of those where there's not a lot of accountability and oversight on ensuring that the intended beneficiaries of the program actually see that benefit.”

Listen to the full episode here.

Domestic Policy Caucus Signs on Coalition Letter to Legislators to Stop 340B Expansion in North Dakota

The Domestic Policy Caucus joins American Free Enterprise, AFP North Dakota, and North Dakota Watchdog Network to warn against House Bill 1473, as it would expand the federal 340B Rx drug program and cost North Dakota taxpayers and employers millions of dollars.

The following are key findings from the 2025 financial impact report from IQVIA, which analyzes the cost of forgone rebates to employers and state/local governments: 

• Nationally, forgone rebates on prescriptions filled with 340B pricing increased commercial employer costs by over $6.6B and state and local government plans by $1B in 2023.

• In North Dakota, forgone rebates on 340B prescriptions increased commercial employer costs by over $53.4M and state and local government plans by $9.5M in 2023.

• For North Dakota, 340B contract pharmacy mandate bills would further increase this cost by $13.9M for commercial employers and $2.5M for state and local governments.

Read the full letter here.

DPC Writes to Oklahoma Legislators to Request a "No" Vote on 340B Expansion

Domestic Policy Caucus Secretary/Treasurer Kent Kaiser, Ph.D., today wrote to members of the Oklahoma House of Representatives Civil Judiciary Committee to request a "no" vote on House Bill 2048, which would expand the 340B drug pricing program in the state.

In part, DPC wrote, "Before it is ever expanded, the 340B program needs to be reformed. You should pursue reforms that include oversight and transparency so that hospitals and pharmacies must report exactly how much revenue they generate from the 340B program and exactly how much of that money is used to provide prescription drug discounts to patients like the original law intended. You should also define exactly who is a 340B patient, and you should require that patients be notified if they are designated as 340B patients. This would be a good start before ever thinking about expanding the 340B program in Oklahoma... Please vote “no” on expanding 340B. Oppose HB2048."

Read the full letter here.