On October 23, 2025, the Senate Health, Education, Labor, and Pensions (HELP) Committee held a hearing on the 340B Drug Pricing Program. This hearing served several purposes including: (1) defining this program’s original intent, (2) addressing its continual growth, (3) underscoring its impact on patients, and (4) offering potential reform options. Despite the proposal of some reforms, lawmakers did not reach any decisive conclusions about a path forward.
Congress created the 340B program in 1992 as part of the Veterans Health Care Act. This statute requires pharmaceutical manufacturing companies to sell drugs at lower rates to “covered entities,” which include safety-net providers, in exchange for having their drugs covered by Medicaid and Medicare. This program is designed “to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” However, critics argue that this original goal of helping patients is not being met.
The Growth of the 340B Drug Program and Rising Costs
Many raised concerns about the program’s consistent growth and the subsequent link to rising healthcare costs for both employer-based insurers, as well as Medicare and Medicaid programs. Chairman Cassidy noted that this rising burden may be due to vertical integration, particularly among pharmacies, and increased financial incentives within hospitals to prescribe more expensive, and greater number of, drugs—notions echoed by two of the witnesses. While these positions hold merit, all three witnesses held that it is impossible to definitively conclude the root of these increased fiscal burdens because of the lack of provider reporting requirements.
Many Senators expressed concerns that patients are not receiving direct benefits from this program, as the original statute does not contain requirements regarding where these savings are directed. For example, some mentioned that hospitals use these funds to generate providers and Pharmacy Benefit Managers (PBMs) more revenue. Additionally, one witness pointed to a study which found that patients, on average, spend more at 340B hospitals due to the financial incentive to prescribe more drugs, or more expensive drugs.
Despite these criticisms, however, there was an overwhelming consensus that this program supports patients by keeping safety net facilities open and allowing for more treatment of uninsured populations. According to one of the witnesses, Maine healthcare facilities collectively received $144 million in discounts through 340B, which “makes a difference between a negative operating margin and a positive operating margin.” And, given the increase in uninsured population from the possible expiration of ACA subsidies and projected Medicaid cuts as part of the One Big Beautiful Bill Act, most Democrats argued that these savings will be more important than ever to keep safety-net facilities operational.
The hearing emphasized that the administering agency, Health Resources and Services Administration (HRSA), lacks significant regulatory power to ensure that (1) these funds are being utilized to benefit communities and (2) facilities are operating in full compliance with the statute. In her opening testimony, one of the witnesses from the Government Accountability Office (GAO) noted that due to this lack of oversight power, HRSA has only implemented five of 20 recommendations to address these problems.
Also, to address the other concerns, the hearing discussed measures such as statutory rules for detailed public reporting. One witness pointed out the possibility of implementing community benefit requirements, which could set clear standards for uncompensated care, debt forgiveness, and initiation of community programs. The Rebate Model Pilot Program was also discussed. This is a voluntary program, only open to select drugs and manufacturers, designed to offer retrospective rebates instead of upfront discounts. This program aims to reduce spending through granting pharmaceutical companies increased oversight over how the discounts are awarded. However, many in the hearing were quick to express concern about the high upfront costs and lack of guaranteed rebates under this reform.
Conclusions
This hearing showcased the 340B program’s essential nature in supporting patients and providers, particularly in facilities with strained funding. Lawmakers across the aisle raised concern about the program’s lack of transparency, contending that increased oversight could provide some benefits. With this said, many held that too many reforms would affect facilities’ bottom lines. Therefore, if Congress were to act, it must preserve the program’s original intent, while also establishing a regulatory framework of targeted reforms.