A new report on the 340B Drug Pricing Program released Thursday by the chairman of the Senate Health, Education, Labor and Pensions Committee calls for “much-needed” legislative reforms around transparency and oversight of the contentious discount program.
Chairman Bill Cassidy, M.D., R-Louisiana, kicked off his investigation in late 2023 as a response to substantial increases in the program’s utilization among providers. Over 60,000 total covered entities were participating as of February 2025, per the report, with federal and proprietary data from 2023 suggesting that the roughly $66.3 billion in discounted outpatient drugs purchased through the program would have hit $124.1 billion wholesale.
The senator’s investigation was also prompted by ongoing court battles over restrictions imposed by drugmakers on covered entities dispensing the drugs through multiple contract pharmacies, which they argued would limit abuse of the substantial discounts. Providers have contended that the expansions are necessary to fend off financial losses and ensure low-income patients’ access to care in line with the program’s intent.
The years since have seen providers and pharmas alike lean into their positions, with additional restrictive policies that provide the statutory discounts as rebates taking center stage of the debate. Other lawmakers have also waded into the issue, particularly in light of investigative reports finding some health systems benefiting from the program appeared to pass few of the savings along to underserved communities.
The investigation from Cassidy—a leading figure on congressional health policy—involved information requests to eight program participants that had been the subject of some of these reports. This approach, though “limited in scope,” sought to paint a picture of the program’s participants without singling out any specific type of entity, according to the report.
Specifically, the report (PDF) involving findings from two hospital covered entities (Bon Secours Mercy Health and Cleveland Clinic), two federally qualified health center covered entities (Sun River Health and Yakima Valley Farm Workers Clinic), two contract pharmacies (CVS Health and Walgreens) and two drugmakers (Eli Lilly and Amgen), and also incorporated data and information voluntarily submitted by Johnson & Johnson.
Among the hospitals camp, both of which are among the nation’s larger nonprofit health systems, Cassidy’s staff confirmed hundreds of millions of dollars in savings and revenue stemming from the program. The systems didn’t directly pass the savings to patients but have financial assistance programs in place and suggested the savings help address overall operating shortcomings. Though not specifically allocated in their operating budgets, both organizations said the savings help fund capital improvement projects and community benefit programs, reflecting the statute’s goals.
Among the FQHCs, both among the top 10 largest in the country addressing medically underserved populations, the report found more than $100 million in annual 340B revenue. The two differed on whether they use contract pharmacies or owned to dispense the drugs as well as on how they applied the “significant discounts” for their patients.
Among the contract pharmacy companies, Cassidy’s team found “a complex range of fees” charged to covered entities and noted that they increased annually. They also charged additional fees for third-party administrator services on top of the contract pharmacy dispensing fees, “retaining even more 340B revenue” and driving “significant growth in revenue,” according to the report. The provider groups reviewed for the report pointed to these rising fees, which they said are “making it increasingly challenging to deliver essential services and care to patients.”
Finally, the drugmakers outlined several billion dollars in discounted drugs. Over a roughly six-year period, Eli Lilly outlined $7.5 billion in sales at 340B rates that would have reached $16.9 billion wholesale acquisition based on list prices, a 44% discount. Amgen, which specifically spoke to its Enbrel product, $145.3 million of sales at 340B prices would have been $4.7 billion at wholesale across six years, with the average discounts ranging from 94.6% to 97% depending on the year.
Other conclusions Cassidy’s team reached from the drugmakers’ submissions largely echoed pharmaceutical industry talking points on the program: Drug manufacturers “have difficulty ensuring 340B Program integrity,” sales to contract pharmacies have grown faster than direct sales through the program and restrictions imposed by the companies on use of contract pharmacies “have not led to a meaningful decline in 340B utilization of their drugs.”
Based on the findings, Cassidy’s staff recommended new legislation to require the covered provider entities to provide more detailed annual reporting on how they’re using 340B revenues for patient benefits as well as legislative changes that more clearly define eligible patients and contract pharmacies’ use of the inventory replenishment model.
Other recommendations homed in on the contract pharmacies and third-party administrators—a requirement for more transparency and data reporting as well as more investigation on whether the fees they charge are disadvantaging covered providers and their underserved patients.
“This investigation underscores that there are transparency and oversight concerns that prevent 340B discounts from translating to better access or lower costs for patients. Congress needs to act to bring much-needed reform to the 340B Program,” Cassidy said in a release. “I look forward to continuing my efforts to bring transparency and improvements to the 340B Program.”
The American Hospital Association, in a responding statement, said the senator’s report “correctly observes” 340B’s goal of expanding hospital care and “demonstrates that hospitals use 340B savings to provide financial assistance to low-income patients and to maintain programs that enhance patient services and access to care.”
The lobbying group’s statement did not address the report’s findings on the health system’s increasing utilization and limited transparency nor its recommendations for more specific reporting on the use of 340B revenues.
340B Health, which specifically represents hospitals participating in the program, was more explicit about its “concerns with several aspects of the report that may not fully reflect the purpose or implementation of 340B.”
Specifically, it pointed to the high discount rates reported by the drugmakers, which they said don’t disclose the higher-than-normal discounts that stem from penalties that can be issued when a drug price increases above the rate of inflation or when other purchasers receive their own major discounts.
“Thus, the 340B savings reported for such drugs is due to the manufacturers’ decisions on how high to price these drugs, not to use by providers,” said Maureen Testoni, 340B Health’s president and CEO, in a statement.
Testoni stressed that the 340B statute names “cost of operations” reductions as a key goal of the program, so long as the covered entities meet other qualifying criteria, and that using the savings for capital improvements and community benefits also benefits low-income patients. She also referenced the tighter operating margins of 340B hospitals compared to their peers and their heavier share of Medicaid and uncompensated care delivery.
“We remain committed to working with Senator Cassidy and Congress to ensure that 340B continues delivering value to low-income patients and underserved communities nationwide,” she said.
PhRMA, the lobbying group representing drugmakers, applauded the senator's report and calls for reformative legislation.
In a statement, PhRMA Senior Vice President of Public Affairs Alex Schriver said the finding adds "to the mounting evidence on how big, tax-exempt hospitals, as well as for-profit contract pharmacies and drug middlemen, exploit the system," which it said raises costs for patients, payers and taxpayers alike.
"We support the Senator’s efforts to reform the program and ensure it serves its original purpose: helping patients—not padding hospital and middlemen profits," Schriver said.