Comments to Sen. Cassidy on 340B Drug Pricing Integrity and Affordability for Patients Act discussion draft
Chairman
Committee on Health, Education, Labor & Pensions
United States Senate
428 Dirksen Senate Office Building
Washington DC 20510
Dear Chairman Cassidy:
The HIV+Hepatitis Policy Institute is a leading national HIV and hepatitis policy organization promoting quality and affordable healthcare for people affected by HIV, hepatitis, and other serious and chronic health conditions. We appreciate your attention to the 340B Drug Pricing Program and your effort to update the program’s statutory framework. We thank you for the opportunity to comment. Because the future of the 340B Program is critically important to people living with and at risk of HIV and the safety-net providers and programs that serve them, we urge you to consider the comments below as the bill evolves.
Critical Importance of 340B to People Affected by HIV
The 340B Program is of critical importance to people living with and at risk of HIV and the safety net which serves them, including Ryan White HIV/AIDS Program (RWHAP) clinics, state AIDS Drug Assistance Programs (ADAPs) and Section 318 STD clinics that provide HIV pre-exposure prophylaxis (PrEP) to prevent HIV. When Congress created the 340B Program in 1992, it specifically included Ryan White grantees, state AIDS Drug Assistance Programs, and Section 318 STD clinics among the safety-net entities eligible to participate, helping them stretch scarce federal resources to serve vulnerable patients. At a time when federal funding has been stagnant, 340B Program income has allowed safety-net clinics and ADAPs to sustain and expand HIV prevention, treatment, and other essential services.
Ryan White clinics, according to HRSA, purchased $3.00 billion worth of 340B medications in 2025.[1] .Under 340B, manufacturers are required to sell drugs to eligible clinics at heavily reduced prices, but clinics can still seek full reimbursement from insurers and other payers. The difference between the discounted purchase price and the reimbursement amount, which is paid by the manufacturers, becomes program income for the clinic. For some Ryan White providers, this income represents over half of their total revenue. In comparison, federal funding for the entire Ryan White Program is $2.6 billion. These revenues augment federal resources and public and private payers by paying for salaries, uncompensated care, and other services consistent with Ryan White grant requirements. Recent RWHAP data show that it served 602,000 clients in 2024, the most ever, a 4.5% increase from the prior year. RWHAP also achieved a record-breaking 91.4% viral suppression rate, up from just 69.5% in 2010.[2] These numbers demonstrate the strong success of RWHAP in leveraging federal funding to serve more people, achieve better results, and curb HIV transmissions.
ADAPs, which help lower-income individuals access treatment, provide a powerful example of how the 340B Program successfully fulfills its legislative intent. The federal ADAP appropriation has been level-funded at approximately $900 million since 2013, while ADAPs have faced growing enrollment and rising costs. According to a recent survey of nine large ADAPs, drug expenditures increased 1.5% annually and insurance premium costs increased 8.3% annually between 2019 and 2025. Yet ADAPs have continued to expand access to treatment, largely due to drug rebates, which comprised 52% of the total ADAP budget in FY2024.[3]
The 340B Program is also critical to HIV prevention, particularly for the provision of HIV pre-exposure prophylaxis (PrEP). The 340B Program is the primary mechanism through which community health centers, STD clinics, and telemedicine platforms are able to provide PrEP to those who need it, with use expanding each year to people who previously had not benefited from PrEP. According to HRSA, STD clinics benefited from $2.86 billion in 340B discounts in 2025 alone; since the volume of 340B purchasing by STD clinics grew by 26.8% percent in one year and most STD drugs are low-cost generics, a part of this growth is likely attributable to PrEP. Community health centers have similarly leveraged 340B, with 87,042 people prescribed PrEP in FQHCs in 2025, up 18.3% from the previous year. Nearly 19% of PrEP users in the U.S. received PrEP through a single telemedicine platform in 2024, one of several which leverage the 340B Program to help pay for PrEP clinical visits and laboratory testing services for the uninsured.[4]
With only 600,000 people using PrEP in 2024, which is roughly half of those who would benefit, the 340B Program remains essential to expanding PrEP use, particularly for underserved populations. The program is especially needed for PrEP because, unlike HIV treatment under the Ryan White Program, there is no comparable federally funded program to support the provision of PrEP.
In order to end HIV in the U.S., a stable and reliable 340B Program is absolutely necessary to sustain both HIV treatment and prevention systems.
In-Kind Contributions and Subgrantee Eligibility (Section 3)
Section 3 of the discussion draft disqualifies covered entities from establishing 340B eligibility based on in-kind contributions rather than direct grant funding from a Section 318 grantee. We strongly oppose this prohibition.
The proposed prohibition on in-kind eligibility may be in response to ongoing litigation and enforcement actions concerning the eligibility of certain Section 318 subgrantees who have been accused of abusing the program. We believe that it is important to prevent abuses of the 340B Program, but this legislative fix is overly broad and would penalize organizations that rely on in-kind support to deliver legitimate STD care, including PrEP, to underserved populations.
We would further note that, by referencing Title XXVI of the Public Health Service Act (PHSA), the discussion draft appears to suggest that in-kind contributions may establish 340B eligibility for Ryan White HIV/AIDS Program subgrantees, which is not the case. This pathway is tied specifically to subgrantees under Section 318 of the Act, which governs STD prevention.
In order to prevent program abuse, we support the registration and certification requirements proposed in Section 3, which would apply to Section 318 grantees. This includes the requirement that revenues be used consistent with the scope of the grant and verification of non-profit status. We believe that these requirements, combined with new HRSA documentation and registration requirements for enrollment and recertification of Section 318 grantees and subgrantees, will suffice to prohibit abuse of the program by entities that provide only a bare minimum of STD services.
Finally, we recommend that the population standard in Section 3 be revised. As drafted, an eligible entity’s patient population must be “primarily” low-income or uninsured. We recommend this be changed to a standard requiring that the entity’s population “include” low-income or uninsured patients, rather than requiring that it constitute a majority of those served.
This distinction matters to many safety-net clinics that serve underserved populations whose insurance status, income, and age distribution vary considerably across geographies. For example, an urban clinic or a rural hospital may serve a critical population of uninsured and underinsured people affected by HIV, or people facing other significant barriers to care, despite the fact that these populations may not compose a majority of patients served.
We recognize that the 340B Program has experienced significant growth among Section 318 recipients. We urge policymakers to distinguish between expansion driven by clinics providing comprehensive STD services, including PrEP, viral hepatitis treatment, and full-spectrum STD care, and growth among entities that have secured Section 318 eligibility while providing minimal or no meaningful STD services. We believe the more targeted approach we have described better addresses program integrity concerns while continuing to support the critical role of legitimate STD clinics in the fight against HIV, STDs, and other syndemic conditions.
Patient Definition: Telemedicine and Rapid Start (Section 4)
We suggest that Section 4’s patient definition be revised so that it reflects how HIV prevention and care are actually delivered today. Telemedicine allows individuals living with or vulnerable to HIV to receive clinical evaluation, counseling, prescribing, laboratory coordination, follow-up, and ongoing care through remote encounters. This reduces barriers created by geography, transportation, work schedules, provider shortages, stigma, and housing instability.
Rapid start refers to the immediate or near-immediate initiation of clinically appropriate medications, including antiretroviral therapy for people diagnosed with HIV and timely access to PrEP and post-exposure prophylaxis (PEP) for those at risk. These models are essential to reaching people who otherwise go unreached in HIV prevention and care, particularly in rural and underserved communities and among patients for whom delay, travel, or instability often mean no care at all.
The legislation should make clear that a patient who receives services through telemedicine or who initiates PEP, PrEP, or antiretroviral therapy through a rapid-start protocol qualifies as a patient of the covered entity for 340B purposes, even if the encounter is remote or represents the beginning of the care relationship.
We also commend the authors of the discussion draft for recognizing the special status of ADAPs in the patient definition.
Transparency and Reporting (Section 6)
We support measures that increase the transparency of 340B Program through the imposition of reasonable reporting requirements.
We would like to emphasize that hospitals account for the vast majority of 340B Program purchases. According to HRSA, hospitals represented approximately $87.1 billion, or 87.1% of approximately $100 billion in 340B purchases in 2025, with DSH hospitals alone accounting for 79.2%. This means that hospitals have accounted for approximately 88% of the growth in the 340B Program between 2023 and 2025. By contrast, Ryan White Program entities (clinics and ADAP) accounted for only 3.1% of the program and 0.9% of the growth in the same years. STD clinics account for 2.8% of 340B purchases in 2025, and 3.6% of the growth between 2023 and 2025.[5]
As we noted in our 2023 comments on 340B Program integrity,[6] hospitals, unlike grantees, face no statutory requirements on how 340B revenue is used and no requirement that patients actually benefit from discounts. We continue to urge that hospitals be required to report on their payer mix, charity care, and 340B margins and reimbursements received. Therefore, we strongly support the transparency and reporting requirements in Section 6 as they advance this goal that rightly focus on hospital covered entities.
We would also note that we recently sent a letter to the House Ways and Means Committee in support of the Tax-Exempt Hospital Transparency Act (HR 9504).[7] The bill would require hospitals to report basic, aggregate information about their 340B activity, building on existing reporting requirements that already apply to Ryan White clinics and other federal grantees but not to hospitals. In that letter, we urged the Committee to go further. Hospitals should also report how they pass 340B savings on to patients and what patients are charged for 340B drugs, since aggregate revenue totals alone will not reveal whether individual patients are benefiting.
In the absence of federal action, states have begun pursuing their own 340B transparency measures. Minnesota, for example, enacted the first state law requiring covered entities to report their 340B revenue, and the state’s most recent report found that Minnesota covered entities generated $1.34 billion in net 340B revenue in 2024.[8] By comparison, the Minnesota Department of Health has estimated that the state’s hospitals spent approximately $241 million on charity care that same year.[9] Even so, the state has been explicit that this data does not capture how that revenue is used or whether patients are benefiting. Robust transparency requirements, on their own, cannot answer that question. That is exactly why a federal standard, and one that goes beyond revenue reporting alone, is needed.
Ryan White HIV/AIDS Program entities, including clinics and ADAPs, are already required to report program and expenditure data, and must spend their 340B income in alignment with the purposes of their grants. We would support applying a similar level of reporting to other covered entities, such as STD clinics. Any reporting requirements should be modeled on those used for the Ryan White Program rather than on hospital-based metrics that do not make sense for federal grantees and subgrantees with overlapping eligibility categories, such as margin data or charity care metrics.
Ensuring Affordability (Section 7)
We also strongly support Section 7’s requirement that hospital covered entities establish a sliding scale to limit out-of-pocket costs charged to low-income and uninsured clients. This is a meaningful step toward ensuring that 340B savings reach patients directly, but it is not a complete fix. Hospitals still face no broader requirement to use 340B revenue for patient benefit, and independent evidence raises real doubts about whether they do so reliably. By contrast, many federal grantees in the 340B Program provide drugs at little or no cost to the uninsured.
A 2015 Government Accountability Office (GAO) report found that Medicare Part B drug spending per beneficiary was substantially higher at 340B hospitals than at non-340B hospitals, a gap GAO could not explain based on patient health status or hospital characteristics.[10] A separate peer-reviewed study found no evidence that hospitals increased their provision of uncompensated care after entering the 340B Program, compared to hospitals that had not yet entered or never participated.[11] Patients, meanwhile, continue to carry heavy medical debt. A 2024 study found that an estimated 20 million Americans owe at least $220 billion in medical debt nationally, with roughly 14 million owing more than $1,000.[12]
As Minnesota’s experience shows, transparency alone tells us how much revenue hospitals generate from this program, not whether patients see any benefit from it. The sliding scale requirement helps close that gap.
Contracting Reforms (Section 9)
We support Section 9’s requirement that third-party administrators and contract pharmacies be limited to flat, fair-market-value fees. Limiting the ability of middlemen and vendors to impose outsized fees from the program is a prerequisite to ensuring 340B savings benefit patients rather than intermediaries.
HRSA Oversight, Resources, and Authority (Sections 11 and 12)
We support Section 12’s grant of authority to HRSA to promulgate implementing regulations and guidance for the 340B Program. Clear regulatory authority has been a longstanding gap in the 340B Program, and we welcome legislative action to close it.
We are concerned, however, that Section 11 funds HRSA’s oversight and enforcement activity solely through monetary penalties for program violations. This funding is both unpredictable and dependent on the very violations this enforcement aims to prevent. We recommend instead that oversight and enforcement be funded by a dedicated user fee, to ensure that HRSA has stable resources no matter how many penalties are levied in any given year.
Conclusion
We support efforts to ensure that 340B is given a firm statutory basis so that it works as intended far into the future. Ensuring that patients of safety-net clinics and programs benefit from the latest scientific innovations is critically important to people and communities affected by HIV and other serious conditions, and merits robust discussion among all stakeholders. We thank the authors of the discussion draft for their efforts to improve the integrity, sustainability and stability of the 340B Program.
If you have any questions, comments, or would like to discuss these issues further, please contact Carl Schmid, Executive Director, HIV+Hepatitis Policy Institute at cschmid@hivhep.org or (202) 462-3042; or Kevin Herwig, Health Policy Director, HIV+Hepatitis Policy Institute at kherwig@hivhep.org or (617) 666-6634.
Sincerely,
Carl E. Schmid, II
Executive Director
[1] https://www.hrsa.gov/opa/updates/2025-340b-covered-entity-purchases
[2] https://www.hiv.gov/blog/new-data-show-over-91-viral-suppression-rate-among-ryan-white-hiv-aids-program-patients
[3] https://nastad.org/2026-rwhap-part-b-adap-monitoring-report/section3
[4] https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2842105
[5] https://www.hrsa.gov/opa/updates/2025-340b-covered-entity-purchases
[6] https://hivhep.org/testimony-comments-letters/response-to-request-for-information-on-improving-integrity-stability-of-the-340b-program/
[7] https://hivhep.org/testimony-comments-letters/letter-to-house-ways-and-means-committee-supporting-hr9504s-340b-transparency-provisions/
[8] Minnesota Department of Health, 340B Covered Entity Report to the Legislature, February 27, 2026, https://www.health.state.mn.us/data/340b/docs/2025report.pdf.
[9] Minnesota Department of Health estimate, cited in Katheryn Houghton, “Minnesota Lawmaker Proposes Using Hospital Tax To Fill Charity Care Gap,” KFF Health News, May 15, 2026, https://kffhealthnews.org/health-care-costs/minnesota-hospitals-charity-care-tax-legislation/.
[10] U.S. Government Accountability Office, Medicare Part B Drugs: Action Needed to Reduce Financial Incentives to Prescribe 340B Drugs at Participating Hospitals, GAO-15-442 (June 2015), https://www.gao.gov/products/gao-15-442.
[11] Sunita M. Desai and J. Michael McWilliams, “340B Drug Pricing Program and Hospital Provision of Uncompensated Care,” American Journal of Managed Care 27, no. 10 (2021): 432–437, https://doi.org/10.37765/ajmc.2021.88761.
[12] Peterson-KFF Health System Tracker, “The Burden of Medical Debt in the United States,” February 12, 2024, https://www.healthsystemtracker.org/brief/the-burden-of-medical-debt-in-the-united-states/.