The 119th Congress has demonstrated focused attention on two critical healthcare policy areas that directly impact drug pricing and access: the 340B Drug Discount Program and pharmacy benefit manager (PBM) reform. While these issues have generated significant legislative activity, the proposed solutions reveal fundamental tensions between protecting existing safety nets and addressing systemic concerns about program integrity and market competition.
The 340B Program: Expansion Amid Growing Scrutiny
The 340B Drug Discount Program, established in 1992 to help safety-net providers serve vulnerable populations, has become a focal point of congressional attention in 2025. The program’s rapid growth—particularly in contract pharmacy arrangements—has generated both protective legislation and calls for oversight reform.
Legislative Protection Efforts
In July 2025, Representative Doris Matsui (D-CA) and Senator Peter Welch (D-VT) introduced the 340B PATIENTS Act, legislation designed to codify 340B providers’ ability to use contract pharmacies to dispense discounted drugs. This bill responds directly to pharmaceutical manufacturer restrictions that have emerged through litigation challenging contract pharmacy arrangements.
The legislation addresses a critical operational issue for 340B providers. Multiple states have enacted laws prohibiting drug companies from denying hospitals the same 340B discounts for drugs dispensed at community pharmacies that would be provided via in-house pharmacies, creating a patchwork of state-level protections that the federal legislation aims to standardize.
Separately, Representative Jack Bergman (R-MI) introduced H.R. 44, the Rural 340B Access Act of 2025, which would extend 340B discounts to rural emergency hospitals—a provider category established by Congress in 2020 but not originally included in the 340B program.
The Contract Pharmacy Controversy
The contract pharmacy issue represents the most contentious aspect of current 340B policy debates. Before 2010, 340B providers could contract with only one outside pharmacy. However, policy changes by the Department of Health and Human Services removed this limitation, resulting in dramatic program expansion from approximately 1,300 contract pharmacy sites in 2010 to over 30,000 in 2025. (Many of these represent individual outlets of large pharmacy chains rather than unique independent organizations.)
This growth has generated significant oversight concerns. The Government Accountability Office has reported persistent compliance challenges, noting that discounts are not consistently passed on to patients and that contract pharmacies are often located in more affluent areas, raising questions about alignment with the program’s safety-net mission.
PBM Reform: Bipartisan Momentum with Diverse Approaches
Pharmacy benefit manager reform has generated more bipartisan support than many healthcare issues, though proposed solutions vary significantly in scope and approach.
The Carter Initiative
Representative Buddy Carter (R-GA) led 11 bipartisan members of Congress in introducing the PBM Reform Act of 2025 (H.R. 4317) on July 10, 2025. This comprehensive legislation addresses multiple PBM practices that critics argue harm patients and independent pharmacies.
The Carter bill includes provisions for “any willing pharmacy” participation in Medicare prescription drug plans, transparency requirements for PBM operations, and restrictions on certain pricing practices that may disadvantage independent pharmacies in favor of PBM-owned pharmacy chains.
Senate Approaches
The Senate has pursued parallel tracks, with the Pharmacy Benefit Manager Transparency Act of 2025 (S. 526) focusing on disclosure requirements and competitive practices. Senators Chuck Grassley (R-IA) and Maria Cantwell (D-WA) have championed transparency measures designed to expose PBM pricing arrangements and prevent anti-competitive practices.
State-Level Momentum
The federal legislative activity parallels significant state-level initiatives, with Alabama, Connecticut, Iowa, Maryland, Mississippi, New Hampshire, Oklahoma, and Virginia all introducing PBM reform legislation in 2025. This broad state engagement suggests underlying policy pressures that extend beyond partisan political considerations.
Market Dynamics and Industry Response
The legislative focus on both 340B and PBM issues reflects broader concerns about pharmaceutical supply chain complexity and pricing transparency. Both programs involve intermediary arrangements that can obscure actual drug costs and create opportunities for margin capture that may not directly benefit end users.
For 340B, the fundamental tension involves balancing program integrity with access preservation. Critics, such as the American Benefits Council, argue that program expansion has driven up costs for employers and working families. Supporters counter that the program remains a vital safety net, particularly in rural areas facing pharmacy closures.
The PBM reform debate centers on transparency and competition concerns. Reform advocates argue that increased transparency and ensuring savings reach patients are critical goals, while PBMs contend that their role in negotiating drug prices provides overall system savings.
Implementation Challenges and Future Outlook
Both legislative areas face significant implementation challenges that may influence their ultimate policy impact.
For 340B legislation, the contract pharmacy provisions in the PATIENTS Act would need to navigate ongoing federal court litigation where pharmaceutical manufacturers have successfully challenged some hospital practices. The legislation would essentially codify practices that courts have sometimes found problematic, potentially creating enforcement tensions.
PBM reform faces the challenge of addressing market concentration without disrupting existing arrangements that do provide some cost management benefits. The Congressional Budget Office, analyzing S.1339 (the Pharmacy Benefit Manager Reform Act as introduced in the Senate), estimated that the bill could increase federal deficits by approximately $245 million over ten years. While this projection applies to a specific legislative proposal rather than the entire category of PBM reforms, it underscores the potential fiscal implications that may complicate political viability.
Policy Implications
The legislative activity in both areas reflects congressional recognition that pharmaceutical pricing and access issues require systemic rather than incremental approaches. However, the specific legislative responses reveal different philosophical approaches to market intervention.
The 340B protection legislation represents a defensive approach designed to preserve existing arrangements against private sector challenges. In contrast, PBM reform legislation takes a more assertive regulatory approach aimed at restructuring market relationships through transparency requirements and competition mandates.
These different approaches may reflect the political realities surrounding each program. 340B enjoys strong support from hospital and clinic constituencies but faces opposition from pharmaceutical manufacturers and some fiscal oversight advocates. PBM reform has broader political appeal because it targets industry practices that affect all healthcare consumers, not just safety-net populations.
The 2025 legislative focus on 340B and PBM reform demonstrates congressional willingness to engage with complex pharmaceutical supply chain issues that have significant implications for drug access and pricing. However, the success of these initiatives will ultimately depend on their ability to balance competing stakeholder interests while addressing underlying market dynamics that have contributed to pharmaceutical cost and access challenges.
The bipartisan nature of much PBM reform legislation suggests a greater likelihood of eventual passage, while 340B measures may face more partisan divisions. Regardless of immediate legislative outcomes, the sustained congressional attention to these issues indicates that pharmaceutical supply chain reform will remain a priority area for federal policy intervention.
Sources
Matsui, Doris. “Matsui, Welch Reintroduce Legislation to Protect 340B Drug Pricing Program.” House.gov, July 22, 2025. https://matsui.house.gov/media/press-releases/matsui-welch-reintroduce-legislation-protect-340b-drug-pricing-program
American Hospital Association. “Lawmakers introduce bill codifying 340B providers’ use of contract pharmacies to dispense discounted drugs.” AHA News, July 22, 2025. https://www.aha.org/news/headline/2025-07-22-lawmakers-introduce-bill-codifying-340b-providers-use-contract-pharmacies-dispense-discounted-drugs
Congress.gov. “H.R.44 – 119th Congress (2025-2026): Rural 340B Access Act of 2025.” Library of Congress. https://www.congress.gov/bill/119th-congress/house-bill/44
Carter, Buddy. “Carter introduces bipartisan PBM reform package.” U.S. Representative Buddy Carter, July 10, 2025. https://buddycarter.house.gov/news/documentsingle.aspx?DocumentID=15782
Congress.gov. “Text – H.R.4317 – 119th Congress (2025-2026): PBM Reform Act of 2025.” Library of Congress. https://www.congress.gov/bill/119th-congress/house-bill/4317/text
Grassley, Chuck. “Grassley, Cantwell Reintroduce Bills to Lower Prescription Drug Prices, Drive PBM Accountability.” U.S. Senator Chuck Grassley of Iowa, 2025. https://www.grassley.senate.gov/news/news-releases/grassley-cantwell-reintroduce-bills-to-lower-prescription-drug-prices-drive-pbm-accountability
American Hospital Association. “AHA files brief defending Tennessee’s 340B contract pharmacy law.” AHA News, June 5, 2025. https://www.aha.org/news/headline/2025-06-05-aha-files-brief-defending-tennessees-340b-contract-pharmacy-law
Congressional Budget Office. “S. 1339, Pharmacy Benefit Manager Reform Act.” CBO, 2025. https://www.cbo.gov/publication/61050
American Benefits Council. “340B PATIENTS Act would raise costs for employers, working families.” 2025. https://www.americanbenefitscouncil.org/benefits-blog/news-releases/340b-patients-act-would-raise-costs-for-employers-working-families/
American Medical Association. “What are pharmacy benefit managers (PBMs) and why we need reform?” August 7, 2025. https://www.ama-assn.org/health-care-advocacy/access-care/what-are-pharmacy-benefit-managers-pbms-and-why-we-need-reform
Pharmacy Times. “PBM Reform Takes Off in 2025.” April 11, 2025. https://www.pharmacytimes.com/view/pbm-reform-takes-off-in-2025
Commonwealth Fund. “340B Drug Pricing Program: How It Works, Why It’s Controversial.” August 6, 2025. https://www.commonwealthfund.org/publications/explainer/2025/aug/340b-drug-pricing-program-how-it-works-and-why-its-controversial
Health Resources and Services Administration. “340B Drug Pricing Program.” https://www.hrsa.gov/opa
Congress.gov. “S.526 – 119th Congress (2025-2026): Pharmacy Benefit Manager Transparency Act of 2025.” Library of Congress. https://www.congress.gov/bill/119th-congress/senate-bill/526
American Medical Association. “Aug. 1, 2025: Advocacy Update spotlight on pharmacy benefit managers under scrutiny.” August 1, 2025. https://www.ama-assn.org/health-care-advocacy/advocacy-update/aug-1-2025-advocacy-update-spotlight-pharmacy-benefit-managers
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