Committee hears experts on 340B program growth and transparency as lawmakers consider oversight bill

Late in the Feb. 16 session the committee heard expert testimony on 340B, a federal drug-pricing program that gives covered hospitals and clinics access to discounted drug prices. William Smith, a researcher who studies 340B, summarized program changes: participation has grown from under 3,000 covered entities in earlier years to more than 14,000 hospitals and clinics and tens of thousands of contract pharmacies. He said the program's current structure can create an incentive for hospitals to capture insured patients and to use contract pharmacy and PBM arrangements that generate revenue from the spread between discounted purchase prices and billed charges.

Smith told lawmakers that nationally net 340B sales reached roughly $124 billion last year and that a large share of contract pharmacies are for-profit chains or PBM-affiliated. He also said charity-care levels have not kept pace with program growth and suggested stronger transparency would help identify which covered entities apply program revenues to charity care and which do not.

Other witnesses at the end of the meeting, including industry and employer representatives, expressed support for enhanced reporting so state policymakers can assess pricing flows and fiscal impacts. Committee members asked about federal audit frequency, whether hospitals and clinics directly purchase drugs, and how contract-pharmacy receipts are structured.

Chair Barrett said the committee will continue technical work on a draft oversight bill (filed as 01/18) and invited additional written detail from witnesses as staff prepare follow-up analysis.