November 11, 2025

Senate Health Committee
Ohio Senate
1 Capitol Square
Columbus, Ohio 43215

Dear Senator,

The Senate Health Committee will hold a hearing on SB 198 on Wednesday, November 12, 2025.  On behalf of the 11,355 members and supporters of the Council for Citizens Against Government Waste (CCAGW) in Ohio, I urge you to oppose SB 198, which will change how the federal 340B Drug Pricing Program operates in Ohio and increase waste and mismanagement.  

To participate in Medicaid, Section 340B of the Public Health Service Act requires drug manufacturers to help federally funded clinics and hospitals cover the cost of drugs and provide discounts to patients.  However, the lack of a clear definition of an eligible patient, along with poor oversight, have led to the program being exploited by contract pharmacies to generate millions of dollars in profit.

A September 9, 2025, Congressional Budget Office (CBO) report showed how the nationwide costs of the 340B program rose from $2.4 billion in 2005 to $66.3 billion in 2023.  The 340B program costs Ohio’s employers and workers $235 million in foregone rebates annually and costs Ohio’s taxpayer-funded public employee health insurance plans an additional $40 million annually.  Legislation with a contract pharmacy mandate like SB 198 could increase costs by an additional $43 million for commercial employers and $8 million for state and local government plans. 

In April 2025, the Senate Committee on Health, Education, Labor, and Pensions (HELP) released a report that highlights the Cleveland Clinic’s receipt of $933.7 million in 340B discount revenue from April 2020 to June 2023, including more than $258 million “through third-party contract pharmacies.”  The Clinic did not clearly designate any portion of its 340B savings for patient drug cost reduction, spending the money instead on amorphous and undefined “capital improvement projects” and “community benefit programs” without citing any specific benefits to patients.  As noted in a May 30, 2025, Ohio Capital Journal article, instead of passing its $933.7 million in 340B profits on to low-income patients, Cleveland Clinic funneled the funds into its general budget and executive pay.  The clinic collected $911 million in net income in 2023 and spent more than $37 million paying 22 executives more than $1 million each and another 30 executives more than $500,000 each.

Since 340B is a federal program, essential reforms like a clear definition of eligible patients should be enacted by Congress.  States should refrain from expanding an increasingly costly program that fuels market consolidation, enables abusive behavior by contract pharmacies, and shifts the costs of 340B covered entities’ extravagant amenities and executive compensation onto employers, patients, and taxpayers.   

Rather than expanding 340B and increasing wasteful spending in Ohio, I urge you to contact your congressional delegation and ask them to reform the program.  Again, I ask that you oppose SB 198.

Sincerely,
Tom Schatz
President, CCAGW