March 13, 2025

Tennessee Senate
Commerce Committee 
128 North 2nd Street 
Clarksville, Tennessee 37040

Dear Senator,

On Tuesday, March 18, 2025, the Senate Commerce Committee is scheduled to hold a hearing on SB 1414.  On behalf of the 26,506 members and supporters of the Council of Citizens Against Government Waste (CCAGW) in Tennessee, I urge you to oppose this legislation, which will impose a manufacturer mandate and change how the federal 340B Drug Discount Program operates in Tennessee.

In 2023, forgone rebates on prescriptions filled with 340B pricing increased Tennessee commercial employer costs by $123 million and state and local government healthcare plans by $18 million.  340B contract pharmacy mandate bills like SB 1414 would increase costs by $25.2 million for commercial employers and $3.7 million for state and local government plans.

A November 2021 Xcenda study, “340B and Health Equity: A Missed Opportunity in Medically Underserved Areas,” showed how 340B boosts hospitals’ coffers and their contract pharmacies’ profits located in areas that do not serve low-income people.  An IQVIA study, “The 340B Drug Discount Program Exceeds $100B in 2022,” found ongoing misuse of the funds by hospitals and contract pharmacies.

A January 23, 2025, fiscal analysis of 340B contract pharmacy mandate legislation in Utah found that, “Enactment of this legislation could also increase pharmacy costs for the Public Employees Health Program (PEHP).  Assuming ten percent more drugs are purchased through 340B pricing, PEHP statewide costs could increase by $1,987,700, ongoing in FY 2026 from the General Fund, Income Tax Fund and Other Financing Sources.”  There is no reason to risk Tennessee taxpayers’ money by enacting SB 1414.

On November 25, 2024, the Minnesota Department of Health (DOH) issued the first report on how the program works in a state.  The hospitals received at least $630 million in 340B revenue in 2023, which may only be half of the total.  The largest hospitals, or 13 percent of participating hospitals, received more than $500 million, or 80 percent of the revenue.  The highest profit was $129 million at M Health Fairview University of Minnesota Medical Centers while federal safety-net grantee clinics generated the least revenue.  The Minnesota DOH report should be a wake-up call not only for Congress to move forward with 340B reform as CCAGW has recommended, including defining a patient as indigent, not eligible for Medicaid, and lacking insurance, as well as verification of patient eligibility by covered entities, but also for states like Tennessee to forgo changes to the program at least until they analyze how it is impacting patients and taxpayers within their borders.

I again ask you to oppose SB 1414.  Rather than acting on legislation that impacts a federal program, I urge you to contact your congressional delegation and ask them to reform 340B.  

Sincerely,
Tom Schatz
President, CCAGW