Senate Report Calls for Reforms to 340B Drug Pricing Program

Senator calls on Congress to increase oversight of the 340B Drug Pricing Program by requiring participating providers to complete annual reports on program savings and revenues.

If your health system participates in the 340B Drug Pricing Program, additional oversight may be coming your way.

A report recently released by Senator Bill Cassidy (R-Louisiana calls on Congress to require participating providers to complete detailed annual reporting on 340B savings and revenues, and how those benefits are passed on to patients. Cassidy, chair of the Senate Health, Education, Labor, and Pensions Committee Chairman, based his recommendations on the results of a two-year-long investigation.

The report also suggests that Congress consider restrictions on fees that contract pharmacies charge through the program and clearer guidelines to ensure that 340B discounts actually benefit patients. 

Senate investigators sought information from eight 340B program participants, including health systems, contracted pharmacies, and drug manufacturers, for the report.

Trust vs. accountability in the 340B program

At their core, arguments over the 340B program focus on whether the federal government should trust that health systems are using 340B benefits to help patients or require health systems to specifically account for 340B savings and revenues to ensure they are being passed through to patients.

Bon Secours Mercy Health (BSMH) and Cleveland Clinic told the Senate that the program does not legally require covered entities to directly pass savings on to patients. Instead, savings generated by the 340B Program “subsidize the significant broader costs associated with providing high quality healthcare,” BSMH CEO John Starcher said in a letter.

While BSMH and Cleveland Clinic don’t specifically account for 340B savings or revenue, many participating providers can point to direct benefits for patients stemming from 340B funds. 

Around three-fifths of covered entities provided discounts directly to uninsured patients at some or all of their contract pharmacies, according to a 2018 government survey cited in the report. Federal grantees, like federally qualified health centers (FQHCs) and disproportionate share hospitals, were even more likely to pass savings on to their patients.

Sun River Health and Yakima Valley Farm Workers Clinic, both FQHCs, pointed to specific areas where 340B funds were being used to offer discounted drugs to patients.

Sun River, which exclusively uses third-party contract pharmacies to dispense 340B drugs, allows uninsured patients to receive free or low-cost 340B drugs through two separate programs. Meanwhile, Yakima Valley uses a sliding fee scale to discounted 340B drugs to its patients through entity-owned pharmacies.

340B growth invites scrutiny

The 340B program has ballooned in size since it was established in 1994. As of February 2025, there are 60,000 provider organizations participating in the program, an increase of 600% since 2000. In 2023, participating providers spent $66.3 billion on outpatient drugs through the program. 

As the program has grown, it has come under increased scrutiny. Earlier this year, the Trump administration issued an Executive Order on prescription drug prices that would significantly impact the 340B program.

The Centers for Medicare & Medicaid Services (CMS), under the first Trump administration, also tried to cut payment rates for 340B drugs. However, the Supreme Court ruled against the reduced rates.

While no changes are set in stone, the writing could be on the wall for the 340B program. Revenue cycle leaders may want to consider contingency plans to account for reduced 340B savings and revenues in the future.