Tom Oliverson, representative for Texas House District 130, said on April 29 that the state should bring more transparency to the 340B Drug Pricing Program next year, citing concerns about its impact on the pharmaceutical supply chain and its benefits to certain pharmacies.
"We are going to bring transparency to 340B in Texas next year and I will gladly lead the charge. This program is like legalized piracy that harms everyone in the pharmaceutical supply chain from manufacturer to patient, except for the 340B pharmacy, who rakes in hundreds of millions of dollars from the scheme," Oliverson said in a statement.
The 340B Drug Pricing Program requires drug manufacturers participating in Medicaid to provide outpatient drugs at discounted prices to eligible hospitals and clinics. Those entities can use the savings to support care for low-income or uninsured patients. However, the program has faced criticism over limited transparency, rapid growth, and financial arrangements that may allow covered entities or contract pharmacies to retain revenue without clear requirements that savings directly reduce patient costs, according to the Government Accountability Office (GAO).
Use of the program has expanded significantly in recent years.
Purchases of 340B-priced drugs grew at an average annual rate of 22.1% over five years, reaching $68 billion in 2023. Over the same period, sales through the program increased 122%, compared with 38% growth in the overall drug market. Contract pharmacy arrangements rose 123% between 2019 and 2023, reflecting increased participation by outside pharmacies, according to a report from BRG.
In 2024, covered entities purchased $81.4 billion in outpatient drugs through the program, with disproportionate share hospitals accounting for approximately $64.1 billion of that total. Overall U.S. prescription drug spending increased 10.1% during that period, reaching $494.9 billion, according to data from the Health Resources and Services Administration.
Some analysts and policy groups say the program can contribute to higher costs for patients when providers acquire drugs at discounted prices but bill insurers and patients at higher rates. The resulting price differences can increase insurer spending, premiums, and out-of-pocket costs, while limited transparency makes it difficult to determine whether savings are passed on to patients, according to The Commonwealth Fund.
Tom Oliverson is a Texas state representative for House District 130 and a physician anesthesiologist. He serves in the Texas House of Representatives and has focused on health care policy and insurance-related issues.
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