March 21, 2025

The Honorable Spencer Cox
Governor of the State of Utah  
350 North State Street, Suite 200   
Salt Lake City, Utah 84114

Dear Governor Cox,

On behalf of the 12,689 members and supporters of the Council for Citizens Against Government Waste (CCAGW) in Utah, I urge you to veto SB 69, which will change how the federal 340B Drug Pricing Program operates in the Beehive State.  

In 2023, forgone rebates on prescriptions filled with 340B pricing increased Utah commercial employer costs by $95.2 million and state and local government healthcare plans by $13 million.  340B contract pharmacy mandate bills like SB 69 would likely increase costs by $26 million for commercial employers and $3.6 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 SB 69’s 340B contract pharmacy mandate 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.” 

On November 25, 2024, the Minnesota Department of Health (DOH) issued the first report on how 340B 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 Utah to forgo changes to the program until they analyze how it impacts patients and taxpayers.

For the above reasons, I ask you to veto SB 69.  Rather than acting on legislation that impacts a federal program, I urge you to contact Utah’s congressional delegation and ask them to reform 340B.   

Sincerely,
Tom Schatz
President, CCAGW