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LUGPA Policy Update - Senator Cassidy’s 340B Reform Report

May 2025 

On April 24, Senator Bill Cassidy (R-LA), Chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, released a new report highlighting critical transparency and oversight deficiencies within the 340B Drug Pricing Program. With 340B drug purchases soaring to $66.3 billion in 2023, the report emphasizes the urgent need for reforms to ensure discounts benefit low-income and uninsured patients, particularly those in need of specialized urologic care.

Background on the 340B Program

Established in 1992, the 340B Program allows eligible healthcare providers, such as hospitals and Federally Qualified Health Centers (FQHCs) serving low-income communities, to purchase outpatient drugs at discounted rates. The program aims to stretch federal resources to enhance patient access and services. However, Senator Cassidy’s multi-year investigation reveals that the program’s growth has not consistently translated into benefits for patients, raising concerns about revenue misuse and administrative complexities.

Key Findings from the Report

Senator Cassidy’s investigation, informed by data from hospitals, FQHCs, contract pharmacies, and drug manufacturers, uncovered critical flaws:

  • Hospital Revenue Allocation: Major hospital systems, including Bon Secours Mercy Health and Cleveland Clinic, generate substantial 340B revenue but often fail to pass discounts to patients. Funds are directed towards ambiguous "community benefit programs" or capital projects, lacking transparency on specific expenditures.
  • FQHC Challenges: FQHCs, such as Sun River and Yakima Valley, rely heavily on high-cost drug classes for significant 340B revenue but inconsistently apply discounts, varying in their use of contract pharmacies and patient savings mechanisms.
  • Contract Pharmacy Fees: Pharmacies like CVS Health and Walgreens impose complex, escalating fees for dispensing 340B drugs, alongside additional Third Party Administrator (TPA) charges, diverting funds from patient care.
  • Manufacturer Concerns: Drug manufacturers report a surge in 340B sales to contract pharmacies, yet challenges remain in preventing program misuse and duplicate discounts.

Proposed Reforms

To realign the 340B Program with its patient-centered mission, Senator Cassidy proposes:

  • Enhanced Transparency: Require covered entities to submit detailed annual reports on 340B revenue allocation, ensuring savings directly benefit patients.
  • Fee Scrutiny: Investigate contract pharmacy and TPA fee structures to prevent resource diversion.
  • Comprehensive Data Reporting: Mandate robust data reporting from all 340B participants to enhance accountability.
  • Clear Eligibility Guidelines: Refine patient eligibility criteria and regulate contract pharmacies' inventory models to ensure discounts reach eligible individuals.
  • Administrative Simplification: Address logistical complexities to improve patient access to program benefits.

LUGPA’s Position

LUGPA fully supports Senator Cassidy’s call for transformative 340B reforms, aligning with our advocacy for equitable, patient-focused healthcare policies. The 340B Program is crucial for ensuring access to vital urologic medications, particularly for underserved populations. However, current transparency gaps and fee structures risk diverting resources from patients in need.

We are particularly concerned about the impact on independent urology practices, which serve as essential care providers in rural and underserved areas. By endorsing reforms that mandate clear reporting and curb excessive fees, LUGPA aims to safeguard these practices' financial stability while ensuring patients directly benefit from 340B savings.

We look forward to collaborating with Senator Cassidy and other policymakers to strengthen the program, enhance access to high-quality urologic care, and prioritize the needs of vulnerable communities.