July 14, 2025

The Honorable Shannon Grove 
1021 O Street, Room 7150  
Sacramento, California 95814

Dear Senator Grove,

On Wednesday, July 16, 2025, the Senate Health Committee will hold a hearing on AB 1460.  On behalf of the 36,385 members and supporters of the Council of Citizens Against Government Waste (CCAGW) in California, I urge you to oppose AB 1460, which will impose a manufacturer mandate and change how the federal 340B Drug Discount Program operates in California.

In 2023, forgone rebates on prescriptions filled with 340B pricing increased California commercial employer costs by $497 million and state and local government healthcare plans by $89 million, according to a February 4, 2025, IQVIA study.  340B contract pharmacy mandate bills could increase costs by $113 million for commercial employers and $20 million for state and local government plans.

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 California taxpayers’ money by enacting AB 1460.

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 California 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 AB 1460.  Rather than acting on legislation that impacts a federal program, I urge you to contact California’s congressional delegation and ask them to reform 340B.  

Sincerely,
Tom Schatz
President, CCAGW