Just over a month into President Trump’s second term and the federal government is in full cost-cutting mode.
The House narrowly advanced the president’s spending plan, directing the House Energy and Commerce Committee to slash $880 billion in what would almost certainly mean cuts to Medicaid. That’s making healthcare safety net advocates anxious, though there’s a long legislative road ahead and plenty of questions about whether those cuts will actually materialize.
Is 340B safe? Remember, the program costs taxpayers nothing — a fact that should exempt it from these discussions but is not well understood by many 340B foes.
At the 340B Coalition Winter Conference, there was lots of talk about opposition efforts by the dark-money group Building America’s Future and its ads that allege 340B “subsidizes healthcare for illegal aliens and gender transitions for kids.”
The organization’s latest stunt was to park LED billboard trucks promoting the claims outside the state Capitol buildings in Nebraska and Kentucky as lawmakers debated 340B contract pharmacy access bills. While the claims are dubious on their own, the group’s efforts were also pointless: Nebraska state law prohibits transgender surgeries for people under age 19, while Kentucky bars the procedures and hormone therapy for minors.
Encouragingly, the contract pharmacy bills advanced in each state.
Meanwhile, we got our first signals about 340B from Congress. Speaking at a convention of the National Association of Community Health Centers, Sen. Bill Cassidy (R-La.) signaled his intention to pursue legislation that would protect 340B clinics but rein in hospitals, which he said have “lost sight of the original mission.” Cassidy is a physician who chairs the Senate Health, Education, Labor and Pensions (HELP) Committee, which has purview over 340B.
The timing of these attacks on the safety net isn’t great. A new report from Chartis, a healthcare advisory firm, says nearly half the nation’s rural hospitals are operating in the red, with 432 at risk of closing. The report notes that many have abandoned inpatient care or unprofitable services like obstetrics and chemotherapy in recent years.
So it’s not hard to imagine how pulling federal Medicaid funds from states or restricting 340B could worsen the situation. “Make America Great Again” should not equate to making America sicker.
The view from D.C.
Meanwhile, Sen. Shelley Moore Capito (R-W.Va.) appeared via teleconference at the NACHC conference to discuss the so-called “gang of six,” a bipartisan group of senators working on legislation to improve 340B. The group, which failed to introduce its SUSTAIN 340B Act last session due to undisclosed disagreements, lost two Democratic members to retirement, while former member Sen. John Thune (R-S.D.) is now the Senate Majority Leader.
“We continue to be dedicated to this cause, and we’ll have more updates soon on our next steps,” Moore Capito said, per 340B Report.
Elsewhere, Tom Engels, who led HRSA for a spell late in President Trump’s first term, is back as the agency’s administrator. And a sixth hospital, The University of Kansas Hospital, sued HRSA over its approval of Johnson & Johnson’s request to audit its 340B program.
Finally, the Senate narrowly confirmed Robert F. Kennedy Jr. to lead Health and Human Services. In the end, Cassidy cast a key vote for Kennedy despite expressing reservations about his stance on vaccines during confirmation hearings in January. I’ll just note that Cassidy faces re-election in 2026 and likely did not want to anger President Trump by opposing his HHS pick.
Left dangling in this maelstrom is the fate of 340B rebates, one of the drug industry’s top priorities. The trade group 340B Health and two member hospitals filed motions to intervene as defendants in lawsuits from five drugmakers against HRSA over their proposed rebate models.
Maureen Testoni, president and CEO of 340B Health, said in a statement the rebates “would force hospitals to divert scarce resources to comply with rebate requirements, pay tens of millions of dollars in additional drug purchase costs, and assume the enormous financial risk of drugmakers rejecting legitimate rebate claims based on their own interpretations of 340B rules.”
State support and backlash
So that’s the view from Washington. What do things look like in the states?
At least 21 states have seen contract pharmacy access bills introduced in 2025, which is hugely encouraging. But it’s also spawning major backlash. Testoni said at 340B Winter that the proposals are spurring an intense lobbying push from the drug industry in state capitals in opposition to the measures.
In related news:
- A federal judge rejected Novartis’ bids to both block Missouri’s 340B contract pharmacy law as unconstitutional and to prohibit the state from enforcing the law throughout its legal challenge.
- Sanofi, GlaxoSmithKline, Alkermes and Boehringer Ingelheim said they will reinstate their 340B contract pharmacy policies in Kansas, where the state attorney general said its law prohibiting such restrictions was unenforceable.
- The same drugmakers, minus GSK, are reinstating their restrictions in West Virginia, where a federal judge said the state cannot enforce its contract pharmacy law while three manufacturer lawsuits are pending.
- Lawmakers introduced bills requiring 340B hospital reporting in Vermont and Kentucky.
Keep an eye on the Hoosier State. There, the state Senate passed an extensive reporting bill, while a House committee advanced a measure that would require 340B hospitals to pass along all their program savings to patients. This after Indiana Gov. Mike Braun ordered an investigation into the eligibility of 340B offsite facilities and the prevalence of Medicaid duplicate discounts.
Lastly, this week over 1,600 stakeholders met at the annual 340B Coalition Winter Conference in San Diego. While times are challenging, it was promising and inspirational to watch the passion that safety net providers exude for the program’s continued viability to ensure they can proceed their mission to care for their communities.
If you'd like to continue this conversation, please contact me at [email protected].