Markwayne Mullin Wants to Make 340B Work for Oklahomans

The federal 340B Drug Pricing Program was intended to provide discounts on drugs to patients but the lack of a clear intent and patient definition, along with inadequate oversight, has led to the program being exploited by hospitals and contract pharmacies to generate millions of dollars in profit.  The discounts are supposed to be provided by federally funded clinics and non-profit hospitals that serve a large uninsured population.  The failure to provide the benefits Congress intended when the program was created in 1992 has led Sen. Markwayne Mullin (R-Okla.) to take a leading role in the efforts to reform 340B.

In March 2025, Sen. Mullin joined the bipartisan Senate 340B Working Group and said that the senators were “working together to restore integrity and intent to the 340B program,” and that he appreciated the “transparent and thoughtful process” that would be “driving results for American families.”

The 340B program is administered by the Health Resources and Services Administration (HRSA).  It requires manufacturers participating in Medicaid to sell drugs at a 20 to 50 percent discount to “covered entities” (CEs), including hospitals and pharmacies with which those hospitals contract.  But CEs face no requirement to pass those savings on to patients nor to reserve the program for indigent or low-income patients.  Congress’s failure to define a 340B-eligible patient has led CEs, especially large hospital systems, to interpret eligibility guidelines so broadly that they can game the program to inflate the hospital revenues and contract pharmacy profits rather than providing discounts to patients.

Employers are also impacted by 340B.  Employer-sponsored health insurance plans lose more than $6.64 billion in foregone rebates each year, according to a 2023 IQVIA study.  The 340B program cost private employers $60 million in Oklahoma alone.  But it is not only private insurers on the hook.  The 340B program cost Oklahoma’s state and local employee health plans $14 million in 2023.

340B program growth has been fueled in part by hospitals increasing the number of pharmacy contracts.  In 1996, the Health Resources and Services Administration’s 340B guidelines allowed a CE to use a single pharmacy service, either in the facility or a contract pharmacy.  In 2010,  HRSA issued a notice declaring that “covered entities will be permitted to use multiple pharmacy arrangements.”  As a result, the number of unique CEs grew from 3,600 in 2010 to more than 5,000 in 2020, while the number of sites, including provider locations related to CEs, grew by 700 percent.  Contract pharmacies had the largest impact on the growth of 340B.  There were fewer than 1,300 contract pharmacies in the 340B program in 2010, but by 2021, there were 29,971, an increase of 2,205 percent.

Movement from lower-cost physician offices to higher-cost hospital outpatient settings also led to increased costs in the 340B program.  When a 340B hospital purchases a physician’s office, it can administer their heavily discounted drugs to its newly acquired patients that have insurance, charging the insurers the full reimbursable price and pocketing the difference.  Because the law allows a broad interpretation of the term “patient,” providers that serve predominantly high-income patients qualify as 340B CEs.

The program was supposed to help health facilities that provide significant uncompensated charity care to many low-income patients.  To ensure the program works as Congress intended, a new statutory patient eligibility definition should be accompanied by an audit system to track how hospitals utilize their 340B savings and prevent duplicate discounting.

Sen. Mullin sits on the Senate Health, Education, Labor and Pension (HELP) Committee, whose majority staff issued an April 2025 report describing the growing exploitation of the 340B program and making recommendations to clarify the definition of an eligible patient and ensure that drug discounts benefit those patients.  His leadership and role on the powerful HELP Committee has the potential to animate the 340B Working Group to bring comprehensive reform to the 340B program, strengthen the program’s integrity, restore its original purpose of supporting vulnerable patients, and increase spending transparency and accountability to taxpayers.

Sen. Mullin understands the urgency of adopting reforms that enhance program efficiency and prevent abuse.  Fixing 340B will help make healthcare more affordable for all Oklahomans and provide the discounts that should have always been given to patients.