Committee hears hours of testimony on 340B program; hospitals and clinics urge protection while manufacturers warn of higher costs

Testimony before the House Industry, Business and Labor Committee covered competing views on the federal 340B drug pricing program and state-level steps proposed in House Bill 1473 to limit manufacturer-imposed restrictions on contract pharmacies.

Representatives of rural hospitals, community health centers and pharmacy associations told the committee that recent manufacturer policies have narrowed which pharmacies can participate, reduced covered entities’ ability to access discounted outpatient drugs, and threatened programs and services that rely on those savings. Eric Christiansen, chief executive officer of Heart of America Medical Center in Rugby, said 340B savings support nonrevenue services such as ambulance operations, daycare, diabetes education and charity care; he provided annual loss figures he said his facility covers from those services and said that threats to 340B would force cuts. Mike Schwab of the North Dakota Pharmacists Association and Erin Navarro, director of pharmacy at Altru, described the program's federal structure and recertification and said manufacturers have begun to restrict the number of contract pharmacies contrary to HRSA guidance.

Coal Country Community Health Center staff described difficulties complying with evolving manufacturer policies that they say have reduced access to medications at local contract pharmacies. Dr. Aaron Garman and Coal Country pharmacy director Alyssa Walden and others described using 340B savings to fund school mental-health counseling, addiction services and other programs they said would be imperiled if discounts are restricted.

Industry witnesses including Jessica Lynch of PhRMA and other testimony warned that a state-level contract-pharmacy mandate could change how discounts and rebates interact, raise federal and state health-care costs, and create litigation risk. Lynch explained the manufacturers’ view that pharmacies were not an original, express subject of the 1992 federal statute and said states that have passed contract-pharmacy mandates faced legal challenges; she cited litigation over an Arkansas law and said the Supreme Court denied a pharmaceutical-industry appeal in late 2024.

Sanford Health and other large health systems explained how 340B savings are reinvested in local services and said penalties or enforcement provisions would be needed for any state mandate to be effective. Mark Hardy, executive director of the North Dakota Board of Pharmacy, told the committee the board could be tasked with enforcement of a state statute affecting manufacturers and that licensure action would be the likely enforcement mechanism.

Pharmacists, hospital officials and community-health providers gave detailed examples of services they say 340B enables. Examples in the hearing transcript included: Heart of America Medical Center reported losing roughly $400,000 a year on ambulance operations, $70,000 on daycare, $20,000 on diabetes education, $2 million on contract labor and about $250,000 in charity care; Altru said 33 manufacturers had stopped honoring 340B discounts to its contract pharmacies and described a successful HRSA audit; several witnesses said North Dakota has 36 critical access hospitals and numerous rural independent pharmacies that rely on the program.

Opponents stressed the potential fiscal impact. A witness citing IQVIA analysis provided an estimate that a state contract-pharmacy mandate in North Dakota could increase healthcare costs by roughly $16.4 million for governments and employers because of how the program interacts with Medicaid rebates and pricing. Others urged federal reform rather than a patchwork of state laws.

Committee members asked both sides clarifying questions about who benefits, how savings are used, whether patients directly receive discounts, and whether manufacturers retain discretion to withdraw from federal pricing agreements. No committee vote on HB 1473 was recorded during the hearing; the record shows only testimony and questioning.