August 28, 2026
The Honorable Bill Cassidy, M.D.
United States Senate
Chair, Committee on Health, Education, Labor, and Pensions
428 Dirksen Senate Office Building
Washington, DC 20510
Re: Landmark Discussion Draft to Fix 340B, Lower Health Costs for American
Patients & Families
Dear Chairman Cassidy,
On behalf of the Pharmaceutical Industry Labor-Management Association (PILMA) – a
partnership between America’s leading biopharmaceutical companies and the union
workers who build and maintain their research and manufacturing facilities – I thank you
for your leadership in advancing a serious legislative proposal to reform the federal
340B Drug Pricing Program.
PILMA has long called on Congress to act. The 340B program was created to extend
the reach of safety-net providers serving vulnerable, low-income patients and
communities. Over the years, that mission has been substantially eroded as for-profit
entities – large corporate hospitals, corporate pharmacy chains, and pharmacy benefit
managers – have taken advantage of the program at the expense of those it was meant
to serve.
Drug expenditures through the program eclipsed $100 billion in 2025i – a 23 percent
increase from the previous year – without consistent transparency or reporting
demonstrating how the corresponding growth in program revenues benefits patients.
Meanwhile, the distortions caused by this misuse drive up healthcare costs for others,
including the workers and retirees covered by union-employer administered Taft-Hartley
healthcare plans. Research commissioned by PILMA found that distortions created by
the 340B program – principally the loss of negotiated manufacturer rebates on 340B-
dispensed claims – are driving up costs for these plans by as much as $1 billion per
year.ii For the roughly 12.7 million Americans covered by these plans, that burden
shows up in higher premiums and reduced benefits.iii
We are therefore encouraged by your initiative to move forward with comprehensive
legislative reform, and we offer the following perspective on the discussion draft’s key
provisions.
Patient Affordability
The program’s foundational purpose is to ensure that discounts flow to the patients who
need them most. The discussion draft’s sliding fee scale requirements for uninsured and
low-income privately insured patients – and the extension of those requirements to child
sites and contract pharmacies – represent meaningful progress toward reorienting the
program toward that original mission.
Rebate and Discount Mechanism
PILMA strongly supports the discussion draft’s provision permitting manufacturers to
elect a rebate or upfront discount mechanism tied to verified claims-level data. PILMA
has previously expressed strong support for HRSA’s proposed 340B rebate model pilot
program on precisely these grounds: linking 340B discounts to actual dispensing data is
one of the most important structural reforms available to restore accountability to the
program.
The current upfront discount model creates conditions in which duplicate discounts go
undetected and manufacturers have no reliable mechanism to confirm that 340B pricing
is applied only to eligible claims. A rebate model corrects this by creating a verifiable
audit trail. We are pleased that the discussion draft extends similar optionality to
covered entities that pass through the 340B price to all patients, and we encourage the
Chairman to ensure that whichever mechanism is selected, the data infrastructure
underlying it is robust, auditable, and administered with meaningful oversight.
Contract Pharmacies
The discussion draft’s approach to contract pharmacies – limiting most hospitals to five
retail locations within their service areas, with mail order restricted to grantees and
eligible rural providers – addresses a category of program expansion that PILMA has
identified as a significant driver of costs to union and employer managed health plans.
PILMA supports meaningful limits on contract pharmacy participation and commends
the discussion draft for taking this issue seriously.
Clarity and uniformity regarding contract pharmacies are particularly crucial. 340B is a
federal program and must be addressed at the federal level. Federal action – not a
patchwork of state-by-state mandates – is the appropriate vehicle for 340B reform.
State expansions of the 340B program, such as those PILMA has opposed in New York
and Minnesota, deepen existing problems and increase administrative complexity
without establishing the clear, uniform standards that the program requires.
Beyond contract pharmacies, establishing clear patient eligibility standards is equally
important to maintaining program integrity and ensuring that 340B benefits reach the
patients Congress intended to serve.
Patient Definition
PILMA also appreciates that the discussion draft takes important steps to define
“patient” for purposes of 340B eligibility. Ensuring that 340B discounts are connected to
individuals who have a genuine and ongoing relationship with a covered entity is
essential to maintaining program integrity and preserving resources for the patients
Congress intended to serve.
PILMA encourages the Chairman to ensure that any referral-based eligibility standard is
carefully defined so that 340B status is tied to documented clinical coordination, an
established care relationship, and a clear connection between the covered outpatient
drug and the eligible service provided by the covered entity. For union-employer health
plans, a clear and enforceable patient definition helps prevent prescriptions from being
inappropriately swept into the 340B program in ways that increase costs for covered
workers, retirees, and their families without advancing the program’s safety-net mission.
The provisions addressed above reflect the areas where PILMA has been most directly
engaged – and together, they represent the core of what durable, effective 340B reform
must accomplish: improving patient affordability, strengthening accountability,
increasing transparency, and ensuring that program benefits are directed to the patients
and communities Congress intended to serve.
PILMA applauds this discussion draft for advancing a conversation that confronts the
structural deficiencies in the 340B program directly and comprehensively. We stand
ready to serve as a constructive partner as this process advances.
Respectfully submitted,
AJ Stokes
Executive Director,
Pharmaceutical Industry Labor-Management Association
i Health Resources and Services Administration. 2025 340B Covered Entity Purchases. Updated July 2026.
https://www.hrsa.gov/opa/updates/2025-340b-covered-entity-purchases
ii Pharmaceutical Industry Labor-Management Association. Evaluating the Role of 340B in Managing Healthcare Costs for Taft-Hartley Plans.
iii International Foundation of Employee Benefit Plans, The Multiemployer Health Plan Landscape: A 15-Year Look (2008-2022). December 2025. https://www.ifebp.org/detail-pages/resource/survey/the-multiemployer-health-plan-landscape-a-15-year-look-2008-2022