Kansas hearing lays out how 340B grew and why federal reform and transparency are back on the agenda

TOPEKA, Kan. — Lawmakers on a Kansas special committee on Oct. 25 heard competing views on how the federal 340B drug-pricing program has expanded since 1992 and whether Congress should act to require more transparency and protect the program’s original safety‑net purpose.

The hearing brought policy analysts, hospital and clinic leaders, pharmacists, employer representatives and advocates to explain how 340B discounts are generated and distributed and to describe federal bills and pilot programs now under discussion in Washington.

“The 340B program has had a profound impact on the landscape of American health care,” Jackson Hammond, senior policy analyst at Paragon Health Institute, told the committee. “The impacts include increased consolidation, higher drug prices, and increased health insurance premiums.”

Why it matters: 340B requires drug manufacturers to sell outpatient medicines at discounted prices to qualifying safety‑net providers, a mechanism intended to help hospitals and clinics stretch federal resources for uninsured and low‑income patients. Witnesses said the program has become much larger than Congress anticipated, producing both benefits for some providers and concerns about growth, opaque revenue flows and downstream cost effects for employers and taxpayers.

Who testified: The committee heard a historical summary from Hammond and a review of national data from Dr. Robert Popovian of the Pioneer Institute. Industry and trade witnesses — including a representative from PhRMA, Caitlin Lucarello — urged federal fixes built around transparency and guardrails. Employer and purchaser groups asked for clearer data showing how 340B discounts affect private health plan costs.

How the program grew: Hammond told lawmakers that 340B began after the 1990 Medicaid Drug Rebate Program established a “best price” rule and that Section 340B of the Public Health Service Act was intended to let qualifying entities obtain lower outpatient drug prices. He said the program expanded from fewer than 100 hospitals in the early 1990s to nearly 3,000 hospitals and more than 14,000 covered entities by 2024, with 340B‑eligible drug purchases rising from roughly $2.4 billion in 2005 to more than $66 billion by 2023.

“The increase in 340B participation was driven by several factors, including off‑site clinic growth, Affordable Care Act changes, and the rise of contract pharmacies,” Hammond said. He added that the program’s growth has raised questions about consolidation — hospitals acquiring physician practices and clinics — and that the program now touches many parts of the pharmaceutical supply chain.

Federal activity and pilots: Witnesses described several concurrent federal efforts. Hammond and others referenced bills and working groups in Congress, including the proposed “Sustained 340B Act” in the Senate and House transparency proposals. The committee also heard about a Centers for Medicare & Medicaid Services pilot to test rebate models intended to reduce duplicate discounts and speed manufacturer rebates to hospitals.

Differing views on effects: Some witnesses framed 340B as essential for keeping rural and community clinics open and for funding services such as dental care, behavioral health and charity care. Others said the program’s lack of public reporting makes it impossible to know whether discounts consistently reach patients, and some studies and state reports suggest portions of 340B revenue are not tied to increased charity care.

“We are not saying the program should be abolished,” Dr. Popovian said in his testimony for the Pioneer Institute. “But 340B has grown far beyond what Congress first conceived, and states and Congress should require better reporting so policymakers can see exactly where those resources go.”

What reform could look like: Advocates for federal reform urged two broad steps: (1) greater transparency so researchers, payers and the public can trace 340B discounts and hospital revenue; and (2) rules to prevent duplicate discounts (particularly involving Medicaid) and to clarify who qualifies as a 340B patient. Several witnesses described state transparency measures already enacted in Minnesota and Indiana as models that reveal how much hospitals and contract pharmacies receive and how funds are spent.

Committee action: The hearing was informational and produced no votes. Committee members said they wanted better data and suggested continuing the conversation and exploring what state actions — short of duplicating federal law — could be useful in Kansas.

What’s next: Multiple witnesses urged lawmakers to press federal representatives for national reform because 340B is a federal program. Several also suggested that state transparency laws could give Kansas policymakers better information to protect rural hospitals while ensuring discounts benefit patients.

Ending: The committee recessed after the day’s testimony with members saying they would continue to study the issue and could propose or support direction to federal legislators if state inquiries confirm problematic revenue flows.