February 4, 2025

Nebraska Legislature  
Committee on Banking, Commerce, and Insurance
Capitol Room 1507
1445 K Street
Lincoln, Nebraska 68508

Dear Senator,

The Senate Committee on Banking, Commerce, and Insurance will soon hold a hearing on LB 168.  On behalf of the members and supporters of the Council for Citizens Against Government Waste (CCAGW) in Nebraska, I urge you to oppose LB 168, which will change how the federal 340B Drug Pricing Program operates in Nebraska.  Congress created 340B in 1992 to fix a problem it created in 1990 when it implemented price controls in Medicaid.  It requires pharmaceutical companies that participate in Medicaid to give discounts of between 20-50 percent to certain federally funded facilities and disproportionate share hospitals.  But 340B does not define “patient” or require covered entities to pass on drug savings to patients.

An April 14, 2023 IQVIA study, “The 340B Drug Discount Program Exceeds $100B in 2022,” found ongoing misuse of the funds by hospitals and contract pharmacies.  A November 2021 Xcenda study, “340B and Health Equity: A Missed Opportunity in Medically Underserved Areas,” provided further evidence of how the 340B safety-net program is boosting hospitals’ coffers and their contract pharmacies’ profits that are largely located in areas that do not serve low-income people.

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. 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.”

The Minnesota and Utah reports show why states like Nebraska should forgo changes to the program at least until they analyze how it is impacting patients and taxpayers within their borders and why Congress should reform 340B 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. 

Rather than acting on legislation that impacts a federal program, I urge you to contact your congressional delegation and ask them to reform 340B.  Again, I ask that you oppose LB 168.  

 Sincerely,
Tom Schatz
President, CCAGW