Landmark Discussion Draft to Fix 340B, Lower Health Costs for American Patients & Families

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.

https://pilma.org/wp-content/uploads/2026/01/PILMA-Evaluating-the-Role-of-340B-in-Managing-Healthcare-Costs-for-Taft-Hartley-Plans_1-29-26.pdf

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

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