September 23, 2025
News Release
From: Chase Martin, Chairman, American Resolve
To: Senator Beverly Gossage, Chairwoman, 2025 Special Committee on Pharmaceutical Studies
Dear Chairwoman Gossage and Members of the Special Committee:
My name is Chase Martin and I serve as Chairman of American Resolve. American Resolve is a nonprofit organization that is committed to a future grounded in the values on which our nation was founded. We advance these ideals through research, education, and thoughtful dialogue with leaders across the country who believe America thrives when it rewards opportunity, fosters innovation, and protects freedom.
American Resolve offers this testimony in support of much-needed reforms to the 340B Drug Pricing Program. Although the program was created by federal law, state legislatures can and should exercise authority to ensure that 340B operates transparently and fairly within their states.
The original goal behind 340B when Congress created it in 1992 was to help hospitals that serve the most vulnerable among us by allowing them to purchase pharmaceuticals from drug companies at discounts. The idea was that these hospitals—themselves nonprofit institutions with a duty to provide free or reduced cost care to underserved communities—would use the savings they realize to help support this mission.
Unfortunately, two phenomena have grown and intertwined to turn the 340B program into an abomination of its original form. First, the Affordable Care Act (ACA) and associated federal rulemaking vastly expanded the number of 340B-eligible health care providers, or covered entities, and allowed those entities to contract with an unlimited number of pharmacies to dispense discounted drugs. Hospitals expanded the program’s reach into ever-wealthier communities, reaping massive profits as a result.
Second, hospitals simply absorbed the profits into their operating budgets, allowing this windfall to be used for shiny new facilities, extraordinary executive compensation, and controversial ideological missions that have little to do with giving back to underserved communities. Federal law does not place any controls on how covered entities may spend these profits, nor does it mandate transparency.
Covered entities’ revenues from 340B hovered around $3 billion annually in the years before the ACA’s 2010 enactment. In 2023, that number reached $66.3 billion. The number of covered entities grew from 575 in 2007 to 5,085 in 2022. The number of pharmacy contracts grew from 151 to 41,917 during the same time.
In North Carolina, an extensive study by the State Treasurer found that hospitals charged 84.8 percent more for cancer drugs under the 340B program than for the same drugs outside the program. The state health plan’s drug costs increased 49 percent between 2018 and 2022, with one hospital even buying a cancer drug for $517 and billing the plan $5,353. Meanwhile, 340B hospitals actually provided less charity care than non-340B hospitals in North Carolina.
Fraud and abuse, which Kansas has done a great job of addressing in a variety of programs, are rampant and highly enabled by the 340B program. The Health Resources and Services Administration (HRSA), the federal agency responsible for 340B oversight, only audits 0.33 percent of covered entities annually. Unlawful duplicate discounts—combining 340B drug discounts with Medicaid rates—grew from $180 million in 2014 to up to $1.6 billion in 2019.
This drug price gouging wouldn’t be as alarming if hospitals used their profits to help the uninsured, but 340B covered entities are charging uninsured patients the same amount as those who are covered by insurance—and about 3.8 times what they paid under the 340B program.
Instead, hospitals are squandering their ever-increasing profits. After reaping $3 billion in savings over three years, the Cleveland Clinic had 22 executives with more than $1 million in annual compensation, including a CEO earning $7 million per year, according to a recent Congressional investigation. New York’s Community Health Care Association touted free health care provided to illegal immigrants as a result of its hospitals’ 340B profits. Hospitals like Howard Brown Health in Chicago brag about using 340B revenue to pay for gender ideology programs and gender transition procedures.
Fortunately, the State of Kansas can take steps to stop this abuse of the 340B Drug Pricing Program. This Legislature can order a thorough study like that conducted in North Carolina to shed light on program excesses here. State executive agencies can enforce federal laws related to duplicate discounts and other illegal practices. State leaders can engage covered entities and the public in a much-needed conversation about how these drug savings can better benefit the neediest Kansans. Taking these and other steps that are under consideration by the Special Committee would be a significant step toward preserving taxpayer and ratepayer funds while ensuring care for the truly needy.
American Resolve stands ready to provide any further information or assistance that this Committee sees fit to request.
Respectfully submitted,
Chase Martin