Erik Paulsen, former U.S. Representative for Minnesota’s 3rd Congressional District, said on April 27 that the federal 340B prescription drug program lacks sufficient oversight and transparency, arguing that hospitals and other participating entities are able to generate significant revenue without clearly showing how funds are used for patient care.
"340B includes thousands of hospitals, their 'child sites' and for-profit pharmacies, and none of them are required to report on how they use the millions of dollars they receive from 340B. Hospitals want us to take their word that they are using it responsibly. And they want state legislators to pass a bill ensuring they can continue benefiting from 340B without accountability," Paulsen said.
"Without oversight, misuse occurs. And there are signs that misuse of the 340B program is affecting everyone’s pocketbooks. The 340B program has created a healthcare system where costs are increasing for everyone," he added.
The 340B program involves billions of dollars in discounted drug purchases by hospitals and clinics, with ongoing debate over whether the savings are passed on to patients or contribute to broader healthcare costs. Paulsen said Minnesota lawmakers should avoid expanding 340B-related protections without stronger accountability measures.
The program requires drug manufacturers to sell outpatient drugs at discounted prices to eligible safety-net providers serving low-income and uninsured patients. However, it does not require that savings be passed directly to patients or tied to specific uses, and research published in JAMA Health Forum has raised questions about transparency, program growth, and whether benefits consistently reach patients.
The Medicare Payment Advisory Commission estimates that covered entities receive average discounts of about 22.5% off outpatient drug prices, which can influence drug selection and utilization. The Health Resources & Services Administration reported that 340B covered entities purchased $81.4 billion in outpatient drugs in 2024, underscoring the scale of the program.
Erik Paulsen served in the Minnesota House of Representatives from 1995 to 2009, including as majority leader from 2003 to 2007, before representing Minnesota’s Third Congressional District in the U.S. House from 2009 to 2019. His public record includes both state legislative leadership and five terms in Congress.
