Dear [salutation],
In July, I introduced the bipartisan SECURE 340B Act, the first-ever comprehensive, bipartisan proposal to modernize the 340B Drug Pricing Program since its creation in 1992. In this week’s newsletter, I’ll explain what the 340B program was designed to do, why we must reform it, and how we're all affected. Apologies in advance for a super technical update, but this is a nationally important effort; The bottom line is that this multi-hundred billion dollar program has ballooned so that a lot of money is being spent in ways that aren’t intended, the disadvantaged folks who are supposed to get the benefit may be missing out, and all of our insurance rates are at risk of going up.
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340B is a federal program created to help safety net providers buy prescription drugs at discounts of up to 50 percent so they can stretch their resources and reinvest in better healthcare for underserved patients. Providers are supposed to dispense these discounted drugs to eligible patients and cannot divert these drugs to other patients. It's America’s second largest prescription drug program, behind only Medicare Part D, and it's growing fast. Today, over 60,000 entities participate in 340B, a more than 600% increase since 2000, with a record spend of $100 billion in 2025 alone. |
Gaps in the law and lack of oversight have led to misuse and uncertainty in the program. For example, the New York Times found that Bon Secours Health System, in Virginia, used 340B funds to expand services in affluent neighborhoods at the expense of patients who really needed it.
So how did the program get here?
For starters, the program was intended to help low-income or vulnerable patients treated at safety-net hospitals, but federal law never defined who qualifies as an eligible 340B "patient."
Drug companies tried to create their own "patient" definition to provide discounts after healthcare providers proved the medicines were given to eligible patients. Courts blocked drug companies from doing this. However, the Trump Administration just announced it will pursue its own rebate model program, now set to take effect January 1, 2027. This radical switch from an upfront discount to a rebate on the back end could create serious cash flow problems for providers who rely on the program.
Though drug companies and the Trump Administration are trying to reform the program by themselves, federal law still doesn’t allow for a uniform way to prevent duplicate discounts or to prevent discounted medicines from going to ineligible patients. The law also doesn’t provide any way for the government to validate 340B pricing data across Medicaid, Medicare price negotiations, and other federal programs.
Meanwhile, the law makes no mention of 'contract pharmacies' — external pharmacies that partner with healthcare organizations eligible for the 340B program. Without clear rules, 'contract pharmacies' can sometimes give discounted drugs to people who aren't eligible for them, and drug companies end up paying for it anyway. This undermines the trust and legitimacy of this program as a whole.
Although the Health Resources and Services Administration (HRSA) permitted these arrangements for years, drug manufacturers began restricting shipments to contract pharmacies in 2020. This disrupted patient access to critical medications. States have responded with a patchwork of laws, but because 340B is a federal program, it requires a federal solution.
Finally, hospitals can extend 340B discounts to acquired outpatient "child sites." These are off-campus outpatient facilities, clinics, or infusion centers operated by a main hospital or "parent site." And while this practice might not seem problematic, some hospitals have abused it to collect massive discounts while they simultaneously cut services for underserved patients — another way 340B has strayed from its intent and mission. |
340B abuse means discounted drugs may not reach the patients they're intended for, and there is a significant risk of upward pressure on insurance premiums for everyone else. The nonpartisan Congressional Budget Office (CBO) found that the 340B program encourages providers to prescribe more expensive medications and purchase and consolidate independent clinics. CBO also found little evidence that low-income patients truly benefit from 340B. This leads to higher costs and increased premiums for everyone.
According to independent analyses, growth in the 340B program increased health insurance costs for Americans with employer-sponsored insurance by nearly $23 billion.
Altogether, these shortcomings matter in San Diego where world-class health care exists alongside skyrocketing prescription drug costs. In 2023, 20 percent of Californians did not fill a prescription, and 16 percent reported cutting pills or skipping doses to save money. |
My SECURE 340B Act would close the loopholes that have allowed the program to drift from its purpose, stop the legal chaos that plagues the program, and ensure transparency and accountability to keep 340B strong. More specifically, it would: Establish a clear, statutory definition of who qualifies as a 340B "patient" based on HRSA’s 1996 guidance. Place a four-year pause on rebate models while new program standards are implemented. Require HRSA to contract with an independent, conflict-free clearinghouse to verify accuracy, protect privacy, prevent duplicate discounts, and support HRSA's audit authority. Formally authorize contract pharmacies under new transparency and eligibility standards. Hospitals and clinics would be required to provide discounts to patients with incomes up to 400% of the federal poverty level. Permit child site prescriptions to qualify for 340B only when the patient meets the new definition, the site is fully integrated with the main hospital system, and it treats Medicare and Medicaid patients fairly while offering the same patient assistance discounts as the parent hospital.
The bottom line is that my bill would lower health care costs for everyone while reducing waste, fraud, and abuse. It would fix the 340B program to save taxpayers money and ensure the program serves the patients it was created to help. |
In a compelling video story, PBS highlighted exactly that what countless doctors, advocates, and women said would happen when Roe v Wade was overturned 4 years ago has actually come to pass
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Click here for a comprehensive list of the actions I've taken to push back on the Trump Administration and protect San Diego.
Please forward this email or encourage others to sign up to receive these updates here. And if there’s an issue or question you’d like me to address in an upcoming newsletter, send me a note here. Thanks, and take care. |
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Scott H. Peters
Member of Congress
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