Senate HELP Committee Chair Recommends Reforms to Drug-Pricing Program 

U.S. Senator Bill Cassidy, R-Louisiana, chair of the U.S. Senate Committee on Health, Education, Labor and Pensions, is calling for major reforms to what is known as the 340B Drug Pricing Program following a years-long investigation which questions whether it truly benefits low-income patients. 

The 340B Program, created in 1992, requires drug manufacturers to offer discounts to certain hospitals and clinics that serve vulnerable populations. The program grew to $66.3 billion in drug purchases in 2023, according to the 195-page report. 

“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 statement. “I look forward to continuing my efforts to bring transparency and improvements to the 340B Program.” 

Cassidy’s investigation found: 

• Hospitals like Bon Secours Mercy Health and Cleveland Clinic allegedly generated hundreds of millions of dollars through 340B discounts but did not pass savings directly to patients. Instead, some funds were used for capital projects or broader community programs, without detailed accounting; 

• Federally qualified health centers, like Sun River Health and Yakima Valley Farm Workers Clinic, also earned major 340B revenue, particularly from a few drug classes, but differed in how they deliver discounts and use contract pharmacies; 

• Contract pharmacies, which enter agreements with a facility covered by the 340B program, such as CVS Health and Walgreens, charge increasingly complex and rising fees for dispensing 340B drugs and managing administrative tasks, which may divert resources from patient care; and 

• Drug manufacturers reported growing 340B sales through contract pharmacies but said they face challenges ensuring discounts reach eligible patients and preventing improper billing practices. 

“The 340B program was originally designed to help low-income patients more easily afford prescription drug medicines,” said Ilyse Schuman, senior vice president, of health and paid leave policy for the American Benefits Council.  “Instead, health systems are using the program in profit-driven ways and passing higher costs on to employers, families and taxpayers—but failing to assist the low-income patients in vulnerable communities the program was originally designed to help.” 

“Employers are deeply concerned about the significant cost that explosive growth of the 340B program has imposed on employer-sponsored health plans,” Schuman continued. “We urge Congress to work with us on reforms to the 340B program that restore the program to its intent without raising costs for employers, employees and taxpayers.” 

To address the findings, Cassidy proposed several reforms, including requiring hospitals and clinics to report how 340B revenues are used, increasing the transparency of contract pharmacy fees and tightening rules to ensure discounts directly benefit eligible patients. 

Cassidy said he will continue pushing for legislation to bring “transparency and improvements” to the 340B program.