March 7, 2025

Colorado Senate 
Committee on Health and Human Services
200 East Colfax Avenue
Denver, Colorado 80203

Dear Senator,

On March 13, 2025, the Senate Health and Human Services Committee will hold a hearing on SB 71.  On behalf of 33,246 members and supporters of the Council of Citizens Against Government Waste (CCAGW) in Colorado, I urge you to oppose SB 71, which will change how the federal 340B Drug Discount Program operates in Colorado.

In 2023, forgone rebates on prescriptions filled with 340B pricing increased Colorado commercial employer costs by $131.8 million and state and local government healthcare plans by $19.6 million.  340B contract pharmacy mandate bills like SB 71 would increase costs by $20 million for commercial employers and $2.9 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 Utah’s S.B. 69 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 Colorado taxpayers' money by enacting SB 71.

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 Colorado 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 71.  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