On October 23, 2025, the Senate Health, Education, Labor, and Pensions (HELP) Committee held a hearing to examine the growth and operation of the 340B Drug Pricing Program. The hearing focused on oversight, financial impacts, patient benefit, and provider practices.
Witnesses included William B. Feldman, MD, DPhil, MPH, a physician and health policy researcher at the University of California; Michelle Rosenberg, Director of Health Care at the U.S. Government Accountability Office; and Aditi Sen, PhD, Chief of the Health Policy Studies Unit at the Congressional Budget Office. A recording of the event is available here.
Chair Bill Cassidy (R-LA) opened the hearing by describing the 340B program as “well-intentioned” but noting that “people are judged by actions, not by intentions.” He said that the committee would hear testimony about “how the program’s participation ballooned with limited oversight, raising questions about how the revenue is used and whether it is actually benefiting low income patients.”
Origins and Purpose of 340B
The 340B program, established in 1992, requires drug manufacturers to provide discounts to eligible healthcare providers—referred to as covered entities—in exchange for Medicaid coverage of their drugs. Rosenberg noted that the program was designed to help these entities “stretch scarce federal resources to reach more eligible patients and provide more comprehensive services.”
Covered entities include certain hospitals and federal grantees such as federally qualified health centers (FQHCs). These providers can dispense discounted drugs and retain the difference between the purchase price and insurer reimbursement. However, as Rosenberg observed “The statute does not specify how this revenue is to be used or require that discounts be passed on to patients.”
Program Growth and Structural Shifts
All three witnesses described significant growth in the program. Sen testified that 340B drug purchases increased from $6.6 billion in 2010 to $43.9 billion in 2021, with a compound annual growth rate of 19%. “By contrast,” she said, “nationwide spending on brand-name drugs grew by about 4% per year during the same period.”
She attributed this growth to multiple factors, including the vertical integration of hospitals and outpatient clinics, expanded eligibility under the Affordable Care Act, and changes in Health Resources & Services Administration (HRSA) guidance that allowed hospitals to contract with multiple off-site pharmacies. Sen noted that while it is difficult to quantify the precise impact of each factor, “vertical integration contributed most to the increase in 340B purchases.”
Patient Benefit and Use of Revenue
Committee members raised questions about how much of the program’s benefit is reaching patients. Witnesses stated that 340B-covered entities are not required to report how revenue is spent or to pass discounts on to patients. Rosenberg explained that GAO audits found variability: “Some [entities] passed discounts on to patients, and others did not.”
Feldman expressed concern that current practices may misallocate resources: “The program may promote acquisitions of new clinics where high-cost therapies are administered… and tends to reward hospitals that locate satellite clinics and contract pharmacies in more affluent communities.”
Senator Tuberville (R-AL) described 340B as a critical support for hospitals serving high numbers of uninsured patients. He cited a hospital in Alabama that provided $100 million in uninsured care but received only $70 million in 340B savings. “340B is the only source of income for American hospitals that isn’t taxpayer funded,” he said, adding, “We should be expanding this, not reforming it.”
Transparency and Oversight
The hearing considered gaps in program oversight. Rosenberg testified that HRSA has implemented some GAO recommendations, including conducting 200 audits annually and verifying some eligibility data. But as of 2025, 15 of GAO’s 20 recommendations remain unimplemented. Key issues include the inability to verify the nonprofit status or service contracts for all participating hospitals, a lack of verification for compliance with Medicaid duplicate discount rules, and limited follow-up on audits.
HRSA has said that it lacks regulatory authority to enforce many of these recommendations. Rosenberg noted, “The agency has told us it does not have appropriate enforcement capability and has requested regulatory authority from Congress.”
Financial Incentives and Market Behavior
Both Feldman and Sen raised concerns that 340B incentives may be influencing provider behavior in unintended ways. Feldman cited studies showing that hospitals in the program were less likely to prescribe lower-cost biosimilars. Sen added that facilities “have financial incentives to prescribe more drugs and to shift prescriptions to drugs for which the difference between reimbursement and the 340B price is large,” potentially increasing federal spending.
Feldman and Sen both noted that contract pharmacy arrangements and “child site” expansions are frequently located in areas with high commercial insurance coverage, raising concerns about mission drift.
Reform Considerations
Several committee members expressed interest in program reform. Senator Baldwin referenced the bipartisan working group which she called the “Gang of Six” and said there was a need for “a strong patient definition,” better contract pharmacy oversight, and reporting standards for revenue use. Senator Cassidy emphasized that reforming the 340B program should not be framed as hurting providers to benefit manufacturers: “This is a false choice.”
Feldman proposed specific reforms, including increasing HRSA audit capacity, requiring more transparency about how revenue is used, placing limits on contract pharmacy and child site locations, and reducing aggressive debt collection by covered entities. “Reforms,” he cautioned, “must be carefully targeted to avoid undermining safety-net providers.”
Conclusion
Committee members demonstrated support for the program’s goals but highlighted interest in improving transparency, oversight, and accountability. While some hospitals and clinics rely on the 340B program to operate, witnesses and lawmakers alike questioned whether the program, in its current form, reliably serves low-income patients. Sen also noted, “The magnitude of [340 B’s] budgetary effects is uncertain.” Senators signaled continued interest in bipartisan efforts to modernize the program without undermining its support for vulnerable communities.
