July 30, 2025

Dear Senator,

On behalf of the more than one million members and supporters of the Council for Citizens Against Government Waste (CCAGW), I respectfully request that during the Senate Health, Education, Labor and Pensions (HELP) Committee hearing on Thursday, July 31, “Making Health Care Affordable: Solutions to Lower Costs and Empower Patients,” you express your opposition to most favored nation (MFN) policies and support for reforms to the 340B drug pricing program, including questioning the witnesses about their views on these critical issues.

MFN will import price controls from other countries and fail to resolve the issues related to foreign freeloading in trade negotiations.  An August 11, 2020, letter signed by 83 organizations expressed “grave concerns” with President Trump’s MFN executive order in his first term noting, “Adopting these price controls will slow medical innovation, threaten American jobs, and undermine criticism of single-payer systems.” It would also “result in the same negative outcomes to our healthcare system as those overseas – less medical innovation leading to fewer cures and healthcare shortages for American patients.”

Members of Congress agree that the administration should act to stop foreign countries from freeloading on American biopharmaceutical research and development.  A July 14, 2025, letter signed by 18 representatives noted, “price setting policies that other countries frequently adopt both undervalue medicines in the non-U.S. market and ultimately make life-saving therapies more expensive for U.S. patients. … the U.S. should not be forced to subsidize medicine costs for the rest of the world at the expense of American patients.”  A July 18, 2025, letter signed by 33 senators, including seven members of the HELP Committee, expressed their support for confronting “these longstanding and unfair price controls that leave Americans disproportionately funding global health care innovation.  Eliminating these egregious practices could increase investment in medical research and development by billions of dollars and lower overall health care costs for Americans.”

Lowering drug prices and delivering meaningful and lasting benefits to patients and businesses will be achieved by reducing regulations, encouraging free-market solutions and American innovation, negotiating better trade deals, and getting foreign countries to pay their fair share.  I urge you to raise objections to any support for MFN from senators or witnesses and suggest these and other solutions to lower drug prices.

Reforming the 340B Drug Pricing Program would also lower costs and empower patients.  It was created in 1992 and requires biopharmaceutical drug manufacturers participating in Medicaid to sell drugs at a 20 to 50 percent discount to “covered entities,” including non-profit hospitals and federally funded health clinics.  The legislation that created the program did not define a patient or require the savings to be passed on to patients.  The resulting broad interpretation of eligibility led to massive growth in the program and has allowed the program to be used to inflate the profits of hospitals and pharmacies.  According to the Health Resources & Services Administration, in 2005, 340B covered entities purchased $2.4 billion in drugs, and in 2023 purchases had increased by 2,500 percent to $66.3 billion, making it the second largest federal prescription drug program after Medicare. 

There have been myriad reports of abuse of the program, including a September 24, 2022, New York Times article on the Bon Secours hospital system in Richmond, Virginia.  Instead of reinvesting profits from 340B drug sales into its disproportionate share hospital facility and improving patient care in a low-income area, the money was being used to invest in facilities in the city’s wealthier neighborhoods.  Dr. Lucas English, who worked in the hospital’s emergency department until 2018, said, “Bon Secours was basically laundering money through this poor hospital to its wealthy outposts … It was all about profits.”  Dr. Peter B. Bach, who has written about the use of 340B profits to open more clinics in wealthier areas, said the hospitals are “nakedly capitalizing on programs that are intended to help poor people.”

The April 24, 2025, Senate HELP Committee Majority Staff report on the 340B drug pricing program exposed significant failures in transparency and accountability and made recommendations for reforms like clarifying the definition of an eligible patient and ensuring that the discounts benefit those patients.

While the report is an important step in the right direction to reform 340B, legislation like S. 2372, the 340B Patients Act, would fail to reform 340B and raise costs for nearly everyone.  According to an IQVIA study, legislation to codify contract pharmacies like S. 2372 would cost $1.8 billion in additional healthcare spending for private employers due to foregone rebates on medicines purchased at the 340B price.  It would also cost $272 million in additional healthcare spending for state and local government health plans and $437 million in additional spending for state Medicaid plans and $763 million per year from foregone Medicaid rebates.

CCAGW’s proposed reforms for 340B include a clear definition of a 340B eligible patient, better verification of patient eligibility at the time the prescription is filled, a relationship between the patient and the covered entity, verification that services were provided within the past 12 months, and increased transparency.

I urge you to ask questions to the witnesses about their support for 340B reform since giving patients the discounts on drugs that Congress intended them to have when the program was created 33 years ago would be one of the most effective ways to lower costs and empower patients. 

Thank you for your consideration of CCAGW’s views on MFN and 340B.

Sincerely,
Tom Schatz
President, CCAGW