When Sen. Bill Cassidy became Chairman of the U.S. Senate Health, Education, Labor and Pensions Committee this year, he stated one of his priorities was reforming the 340B Program. On April 24, 2025, he released a majority staff report concerning the program and providing recommendations.
The 340B Program provides a benefit to the covered entities in two ways: realizing 340B savings and generating revenue. The covered entities realize savings by purchasing discounted 340B drugs from drug manufacturers. They can also generate revenue when the patient’s health insurance reimbursement or their out-of-pocket cost paid exceeds the 340B price the covered entity paid for the drugs. When the program was enacted in 1992, Congress intended for the entities to use this revenue to assist in stretching resources reaching more eligible patients and providing more comprehensive services. As of Feb. 25, 2025, there were more than 60,000 covered entities participating in the 340B Program.
The report found mixed evidence for how 340B Program funds are used.
- Some health systems studied generated millions of dollars in revenue but did not pass the savings along to patients. Others in the study, however, did pass savings on to patients.
- Federally qualified health centers studied also earned 340B revenue but differed in how they deliver discounts and use contract pharmacies.
- Contract pharmacies charge 340B entities complex and rising fees for dispensing drugs diverting funds from patients.
- Drug manufacturers reported difficulties in ensuring that there are not duplicate discounts occurring and issues related to ensuring ineligible patients are not benefiting.
The majority staff report calls for:
- Requiring 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.
- Addressing potential logistical challenges caused by increased administrative complexity, leading to burdens that may impede patient benefit from the program.
- Investigating the types of financial benefits contract pharmacies and third-party administrators receive for administering the 340B Program to ensure that increasing fees do not disadvantage covered entities and patients.
- Requiring transparency and data reporting for entities supporting participants in the 340B Program (i.e., contract pharmacies and TPAs).
- Providing 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 inventory replenishment model.
The timing of legislation and committee action is unclear.
