Employers Call on Congress for Greater Transparency in 340B to Reduce Costs

Healthcare affordability is one of the nation’s top concerns for employers, policymakers, and voters across the political spectrum. For employers that sponsor health coverage, the rising cost of care – driven largely by high hospital prices for services and medications – shows up in higher premiums and increasingly difficult decisions about how to keep coverage affordable for employees and their families.

One area drawing increased scrutiny is the 340B Drug Pricing Program, a federal drug pricing program created in 1992 to help safety-net providers stretch limited resources to serve vulnerable patients. In the three-plus decades since its inception, the program has expanded far beyond its original scope – raising important questions about how 340B savings are used, whether patients are benefiting, and how the program affects the rising cost of employer-sponsored coverage.

Those questions were front and center at the National Alliance’s recent House and Senate staff briefings on June 25, which brought together purchaser experts and policymaker voices to examine how claims-level transparency could improve employer stewardship, strengthen oversight, and inform future efforts to reform 340B to help it meet its original intent.

Here’s what they had to say:

Employers need transparent data to understand where their healthcare dollars go.

“The self-insured employer [doesn’t] have a voice at the table and isn’t part of these conversations.” — Rosa Novo, Executive Benefits Director, Miami-Dade County Public Schools

If 340B-related claims are not clearly identified, employers cannot determine when discounts are being generated, how much hospitals retain, or whether any savings are reaching patients.

That lack of visibility makes it harder for self-insured employers to evaluate value and understand how healthcare dollars move through their plans.

As the benefits purchaser for Florida’s largest school district, Ms. Novo is responsible for managing health benefits on behalf of workers and families. To do so effectively, she needs access to clear, usable information that supports informed decision-making and meaningful participation in conversations about healthcare affordability.

Program growth has increased the need for transparency

“The mission to help the uninsured didn’t grow fifty-fold, but the program did.” — Rep. Roger Marshall, MD (R-KS)

Today, over 53,000 hospitals (approximately 40% of US hospitals) are a part of the 340B Drug Pricing Program, in addition to 32,000 contract pharmacies. At the same time, the program has grown from $4 billion in 2005 to over $80 billion in 2024.

That growth raises important questions about whether the program remains aligned with its intended mission, participants said. Greater transparency would help policymakers, employers, and patients better understand which entities benefit, how savings are used, and whether the program is supporting the people and communities it was designed to help.

New reporting show how data can spark the conversation – and why more is needed

“340B was designed to solve a narrow problem… a bunch of consultants started advising hospitals on how to gain entry into the program… Today, it covers 2/3 of nonprofit hospitals.”— Sayeh Nikpay, PhD, Associate Professor, Division of Health Policy & Management Education, University of Minnesota

Recent reporting from Minnesota illustrates why greater 340B transparency can improve understanding of 340B. After the state passed landmark legislation that requiring financial transparency from 340B hospitals and clinics, the state’s 340B Covered Entity Report found that covered hospitals generated $1.34 billion in 340B profit that had been unknown to policymakers.

According to Dr. Nikpay, 97% of these profits went to hospitals, many of them large and urban, and roughly half of program profits, or $600 million, came directly from the employer-sponsored insurance market.

These findings show why reporting matters. Panelists remarked that better data can give policymakers and purchasers a more complete picture of how 340B dollars are generated and where they flow, creating a strong foundation for discussion about how to ensure the program supports patients, safety-net care, and healthcare affordability.

Employers need the receipts to fulfill their fiduciary responsibilities

“We are required by law under ERISA to be prudent fiduciaries. Yet, we have no visibility into our 340B claims. We need the receipts to do our jobs.” — Shawn Gremminger, President and CEO, National Alliance of Healthcare Purchase Coalitions

In its current form, the 340B Drug Pricing Program leaves employers without the information they need to evaluate how the program affects their health plans. While greater transparency would not address all of the ways that the 340B Drug Pricing Program drives up costs today, it would give employers a stronger foundation to assess value, ask informed questions, and ensure the program is working for patients and working families. To learn more, read the National Alliance’s resources here.