Created by Congress over 30 years ago, the 340B drug pricing program allows certain hospitals and clinics, known as covered entities that serve as “safety net” providers to low-income and uninsured patients, to obtain prescriptions at federally mandated discounted prices from pharmaceutical manufacturers.

The resulting revenue can subsequently be reinvested to subsidize other services. A host of federally qualified health centers have advertised these subsidized services, with some clinics telling patients that 340B savings cover the costs of “gender-affirming care.”

THIS SUBSIDY PROGRAM IS SABOTAGING TRUMP’S AGENDA

For example, the Community Health Care Association of New York explicitly says health centers put 340B savings toward “Subsidizing costs of care for [the] undocumented,” according to an informational document obtained by RealClearPolitics.

Planned Parenthood is part of the 340B Coalition, a consortium of organizations that supports preserving 340B and securing lucrative reimbursement rates. Title X-funded clinics are able to procure prescription contraceptives and devices at a deal through the 340B program, making it possible for them to provide “more comprehensive services,” according to the National Family Planning & Reproductive Health Association.

The Callen-Lorde Community Health Center, which treats “New York’s lesbian, gay, bisexual, and transgender communities — in all their diversity — regardless of ability to pay,” touts online that it can “integrat[e] hormone therapy within primary care” thanks to revenue generated from 340B savings, “a significant source of support for unfunded services at Callen-Lorde.”

Funding derived from 340B is “a vital lifeline for Callen-Lorde,” the clinic says. It is used to “reinvest” in such “affirmation” services as Health Outreach to Teens, a “confidential” program designed specifically for LGBT-identifying adolescents as young as 13 years old. HOTT’s offerings, including individual counseling on “gender identity,” are free-of-charge or low-cost. HOTT is accessible at Callen-Lorde’s “youth-only” medical suite as well as a mobile medical unit that travels throughout all five New York City boroughs to meet teenagers on the streets.

According to Chicago-based Howard Brown Health’s 340B impact profile, the FQHC’s “transgender and nonbinary” teams provide “gender-affirming care,” including cross-sex hormones and “surgical navigation,” as part of expanded programming, which otherwise would not be able to operate without funding from 340B savings. Nearly 3% of Howard Brown Health’s patients are ages 18 and under.

Trillium Health, an FQHC look-alike regarded as the leading LGBT healthcare provider in Rochester, New York, also depends on 340B to provide “transgender care” at little to no cost. This includes referrals for “gender-affirming” surgeries, hormonal injections, and a chest “binder finder.”

Several state legislatures are seeking to expand 340B or have done so in recent weeks.

Utah’s SB 69, which took effect on Wednesday, bans interference with a pharmaceutical entity’s acquisition of a 340B-designated drug. Nebraska’s LB 168, which was signed in mid-April, adopts the 340B Contract Pharmacy Protection Act, prohibiting drug distributors from denying CEs access to 340B drugs. North Dakota’s HB 1473, which was filed with the state secretary in early April, amends state restrictions on 340B, protecting access to discounted drugs and preventing drugmakers from “creating barriers to the 340B program’s implementation.” Kentucky’s SB 14, which the state Senate has advanced to the state House, establishes a new section of Kentucky law that prohibits “discrimination” (i.e., discriminatory pricing practices) against 340B CEs and authorizes the state’s attorney general to investigate violations of this provision.

The Oklahoma Senate voted 40-5 on Thursday in favor of HB 2048, which would create the 340B Nondiscrimination Act. The act would require that a covered entity be reimbursed by insurance companies for 340B drugs at a discounted rate. Under the act, a manufacturer or distributor “must not deny, restrict, or otherwise interfere with the acquisition or delivery of 340B drugs,” according to the bill’s summary. Civil fines of up to $10,000 may be imposed for each violation of the act’s provisions.

When asked whether Gov. Kevin Stitt (R-OK) would sign HB 2048, the governor’s spokeswoman, Abegail Cave, noted that the bill has not reached his desk yet.

“The governor has spoken to stakeholders on both sides of this issue as well as Oklahomans across the state who would be impacted,” Cave told the Washington Examiner. “Upon reviewing the bill, he will make a final determination.”

As of Thursday, the measure was returned to the Oklahoma House for final proof before being presented to the governor.

In Virginia, Gov. Glenn Youngkin (R-VA) vetoed 340B-related legislation last year after the General Assembly rejected his recommended changes to SB 119.

“He is deeply concerned about the federal 340B program and how it could be exploited to provide taxpayer-subsidized healthcare to illegal immigrants,” a Youngkin spokesman told Townhall.

Youngkin’s proposals would have allowed for input from various stakeholders to implement practices that enhance program oversight, such as assessing patient insurance usage, compiling a list of contract pharmacies, analyzing 340B savings, and examining whether benefits actually reach the intended citizens.

DEMOCRATS WANTED TO GIVE SUBSIDIZED HEALTHCARE TO ILLEGAL IMMIGRANTS. GLENN YOUNGKIN SAID NO

“While I agree with the general purpose of the legislation, regrettably, the General Assembly did
not approve my amendments,” Youngkin said in a statement on the veto. “As Congress deliberates the federal 340B Program, stakeholder input, recent court rulings, and program developments must be considered to provide clarity, transparency, and accountability.”

Republican opponents of the program have urged Stitt to follow Youngkin’s lead, saying Stitt should take issue with 340B legislation just as Youngkin did in Virginia.

“Across the country, conservative leaders are taking a stand against 340B, which is a Trojan horse for the Left’s agenda,” a GOP strategist told the Washington Examiner. “It’s a no-brainer for Gov. Stitt to join them. It would be shocking if a top conservative like Gov. Stitt signed legislation to expand 340B — he’d practically be thumbing his nose at President Trump’s agenda to protect our children and stop wasteful government abuse.”

Trump zeroed in on the drug pricing program with an executive order titled “Lowering Drug Prices by Once Again Putting Americans First.”

Under Trump’s directive, the Health and Human Services secretary must conduct a survey to determine “the hospital acquisition cost for covered outpatient drugs at hospital outpatient departments.”

Once the study is completed, HHS “shall consider and propose any appropriate adjustments that would align the Medicare payment with the cost of acquisition.”

340B’s stated purpose is to ensure that vulnerable communities, especially in rural areas, have affordable access to healthcare. However, 340B watchdogs believe these discounts are too steep, with scant oversight guardrails in place, letting hospitals reap much of the benefit. Under the guise of helping the poor, the hospitals allegedly abuse the system by buying deeply discounted drugs through 340B but bill insurers at full price and pocket the difference. Meanwhile, as these entities exploit loopholes to maximize profits, taxpayers and patients foot the bill through hidden costs, according to critics.

CHARITY HEALTHCARE DOLLARS AREN’T MAKING IT TO THE PATIENTS

In an op-ed for the Washington Examiner, Trump’s former director of the Domestic Policy Council said nonprofit hospitals are using 340B, “one of the most wasteful and abused programs the government has to offer,” as a “get rich quick” scheme. What once was a well-intentioned initiative has “morphed into an unchecked profiteering scheme,” ex-Trump aide Joe Grogan said.

In 2022, the New York Times uncovered how a hospital chain, Bon Secours Mercy Health, purchased drugs at the government programming rate and then sold them at an outrageous markup. The vast majority of one Bon Secours hospital’s profits reportedly came from the 340B program. The hospital, Richmond Community, had the highest profit margins of any hospital in Virginia, making $100 million in annual revenue, according to financial data. 

The New York Times recently reported on a case of a breast cancer patient, 65-year-old Virginia King, who received care from a cancer center participating in the 340B program. Even though the patient’s prescribed treatment was listed at a market price of about $2,700, the hospital that owned the cancer center billed King’s insurance company almost 10 times that amount, approximately $22,700. The patient’s insurer paid $10,000, but the hospital demanded an additional $2,500-plus from King, more than half her monthly take-home salary, she said.

According to a 2018 Government Accountability Office report, the number of pharmacies that contract with 340B entities increased more than fifteenfold since guidance in 2010 lifted the restriction on the number of pharmacies with which a covered entity could contract. Initially, contract pharmacies were typically located in the same areas as the covered entity. GAO reported that contract pharmacies are now located between 0 and 5,000 miles away.

Sen. Markwayne Mullin (R-OK) is working at the federal level to reform 340B. In March, while jointly announcing the assembly of a 340B bipartisan working group, which Mullin is a member of, the Oklahoma senator said, “Together, we’re working to restore integrity and intent to the 340B program.”

340B DRUG PROGRAM WAS CREATED TO HELP PATIENTS, NOT BOOST HOSPITAL PROFITS

Senate working groups previously sought feedback from stakeholders on ways to improve the 340B program through bipartisan policy solutions and drafted legislative discussions that included proposed updates. At the time, lawmakers cited community concerns, such as a lack of transparent reporting among covered entities to ensure that the 340B program was being administered as originally intended.

“Due to a lack of statutory clarity, there has been ambiguity over the use of contract pharmacy arrangements, which has led to litigation,” lawmakers said during draft discussion.