Health centers and hospitals urge committee to protect 340B savings as manufacturers and PBMs limit access

Community health center executives, hospital system pharmacists and patient advocates told the Joint Committee on Financial Services that the federal 340B drug discount program is essential to keeping care affordable and locally available — and that actions by drug manufacturers and pharmacy benefit managers are stripping those savings away.

"The 340B program is a vital federal policy that allows eligible safety net providers to stretch scarce resources and invest these savings directly into care," Christina Severn, president and CEO of Community Care Cooperative, said in testimony supporting House Bill 1107 and Senate Bill 819.

The bills before the committee would prohibit discrimination against 340B participants by requiring manufacturers to ship 340B-priced drugs to contract pharmacies that covered entities use and limiting PBM and insurer practices that providers say reduce the value of the discounts. Supporters said those changes would restore millions of dollars to community health centers at no cost to the Commonwealth; opponents urged more transparency and safeguards to ensure funds are used to benefit low-income patients.

Why it matters: Federally qualified health centers (FQHCs) and other safety-net providers rely on 340B savings to fund primary care, behavioral health, pharmacy services and interpreter services that are not otherwise reimbursed. Michael Curry, president and CEO of the Massachusetts League of Community Health Centers, said a league survey in November 2024 found 78% of member centers had an operating deficit and 83% reported at least one service wait list; he told the committee that 340B restrictions are worsening access problems.

Supporters’ case: Testimony from Fenway Health, the Edward M. Kennedy Community Health Center, Lynn Community Health Center, Greater Lawrence Family Health Center and others described specific services funded by 340B savings. Ruby Pazzanetti, chief operating officer at Edward M. Kennedy Community Health Center, said the center uses nearly $3 million in 340B savings to expand services, operate multiple pharmacies and pay for interpreter services, and that the program is "vital for community health centers and is required by federal statute to reinvest every penny in the 340B savings back to our patients in our community." Ryan Abrams, pharmacy director at Greater Lawrence, described an adherence program that packages multi‑drug regimens for patients and said 250 patients are enrolled with more on a wait list.

Opponents and calls for reform: Other witnesses — including public policy analysts and national advocacy groups — said the program has grown beyond its original intent and lacks transparency. William Schmidt, a public policy analyst, said large hospitals and for‑profit entities have profited by buying drugs at discounted 340B prices and being reimbursed at higher rates, and he recommended statutory disclosure of how covered entities spend 340B revenues. Multiple witnesses cited data that many 340B contract pharmacies are located in higher‑income ZIP codes and urged state reporting similar to models in North Carolina and Minnesota.

What the bills would do: Versions filed in the House and Senate would (1) prohibit PBMs and insurers from imposing discriminatory contract terms on 340B providers; (2) require manufacturers to ship 340B‑priced drugs to contract pharmacies covered entities use; and (3) create private‑right‑of‑action or consumer‑protection penalties in some drafts. Sponsors and supporting testimony said 34 states have enacted PBM protections and that 19 states require manufacturers to ship to contract pharmacies.

Unresolved questions and concerns: Witnesses on both sides agreed more data would help. Opponents warned that state mandates could lock in current arrangements without requiring covered entities to demonstrate that savings reach low‑income patients. Several suggested the committee instead require annual public reporting of 340B revenue and its uses for charity care, patient assistance and community programs.

Bottom line: The hearing highlighted a split between providers who say 340B protections are an urgent, no‑cost way to shore up Massachusetts’s safety net and analysts who say the program needs transparency and reform before the state legislates protections. The committee did not vote on any bill during the hearing.