Washington lawmakers are considering flawed legislation - House Bill 2145 - that will enrich hospitals and pharmacy chains while driving up costs for everyone else.

"HB 2145 locks in a broken system, where hospitals buy drugs at a 50% discount and charge patients full price," explains Terry Wilcox, co-founder and executive director at Patients Rising. 

She adds, "When hospitals receive federally-mandated drug discounts, those savings should go to patients. HB 2145 does the opposite: it protects hospitals that charge patients full price and keep the profits."

Understanding the 340B Drug Pricing Program

Before we explain what's wrong with HB 2145, you need to understand the 340B program itself.

Congress created the 340B Drug Pricing Program in 1992 with a simple goal: help vulnerable, low-income, and rural patients access affordable medications through safety-net hospitals and clinics.

Under 340B, drug manufacturers sell medications at steep discounts—sometimes 50% off—to eligible healthcare providers. Those providers are supposed to use the savings to serve more patients who can't afford care.

That was the promise. Here's the reality.

Today, many hospitals participating in 340B don't pass savings to patients. Instead, they buy drugs at discounted prices and charge patients the full retail price. They pocket the difference. It's a classic "buy low, sell high" scheme, except it's funded by a federal program meant to help the poor.

The profits can be staggering. According to a New York Times investigation, one hospital bought a breast cancer treatment with a list price of $2,700 through the 340B program, then billed insurance more than $22,700.

After her  insurance paid $10,000, the hospital went after the patient for another $2,500. 

The problem exploded in 2010 when federal officials allowed hospitals to partner with unlimited numbers of retail pharmacies. Suddenly, major corporate pharmacy chains began cashing in on 340B discounts. Pharmacy benefit managers joined the party. Contract pharmacy arrangements shot up 4,228% in just ten years.

Money that should help patients now flows to corporate middlemen instead.

How 340B Fails Washington Patients Right Now

The numbers from Washington tell a troubling story.

Washington patients and employers pay an extra $218 million because of 340B hospital markups, according to a recent analysis by IQVIA. That burden on Washington pocketbooks will increase to $262M if the state passes HB 2145. 

340B pharmacies should be growing in poor and underserved communities. But, roughly half of Washington's 340B pharmacies supposedly serving low-income patients are located in affluent neighborhoods in Washington.

One in four 340B pharmacies supposedly serving poor patients in Washington are located outside the state. Some of Washington’s low-income patients are even required to utilize for-profit pharmacies in Florida.

"How does a pharmacy in Miami help a struggling family in Spokane?" asks Terry Wilcox of Patients Rising. 

Washington's 340B hospitals provide charity care at just 1.52% of their operating expenses. The national average is 2.15%. Hospitals getting billions in taxpayer-funded discounts to help poor patients are actually doing less for poor patients than hospitals that get nothing from the program.

Where is all that 340B money going? Not to patients.

What HB 2145 Actually Does (And Doesn't Do)

House Bill 2145 prohibits drug manufacturers from implementing safeguards to ensure 340B discounts reach actual patients. It allows hospitals to maintain unlimited contract pharmacy arrangements. It protects the current system.

Here's what the bill does not do:

• It doesn't require hospitals to pass 340B discounts to patients. Hospitals can keep charging full price.
• It doesn't mandate transparency. Hospitals don't have to report how they spend 340B profits.
• It doesn't set charity care standards. Hospitals can pocket billions while providing minimal charity care.
• It doesn't protect patients from out-of-state pharmacy arrangements. That money can keep flowing to Florida while Washington patients pay full price.
• It doesn't reduce patient out-of-pocket costs. Your co-pays and deductibles stay the same.
  

The bill protects hospital revenue streams. It does nothing for patients.

What Real 340B Reform Looks Like

Washington doesn't need HB 2145. Washington needs actual reform that puts patients first.

Transparency Requirements: Hospitals should publicly report all 340B revenue and demonstrate how funds support low-income patients or underserved communities. Right now, they don't have to tell anyone how they spend billions in taxpayer-funded discounts.

Local Investment Mandates: 340B savings should benefit Washington patients through Washington pharmacies. Cap out-of-state arrangements. Require hospitals to prioritize medically underserved areas, not wealthy suburbs.

Patient Protection Standards: Require hospitals to offer 340B discounts to uninsured and underinsured patients. If a hospital buys a drug at a 50% discount, patients should see savings at the pharmacy counter.

Charity Care Accountability: Tie 340B participation to meaningful charity care requirements. Hospitals receiving billions in discounts should provide substantial charity care—not less than hospitals that get nothing.

Independent Audits: The federal agency overseeing 340B audits just 0.33% of participating entities each year. Medicare audits 29% of its providers. Washington can do better by requiring regular independent audits with real consequences for abuse.

These reforms would preserve the 340B program for true safety-net providers while stopping large hospitals and pharmacy chains from exploiting it.

Recent Evidence of Systemic Abuse

A 2024 U.S. Senate investigation exposed the scope of 340B abuse nationwide. Just two hospital systems generated over $1 billion in 340B revenue in recent years without passing savings to patients.

• Richmond Community Hospital: $276.5 million in 340B revenue from 2018 to 2023. Patients saw no benefit.
• Cleveland Clinic: $933.7 million over three years. No direct patient benefits.

Senator Bill Cassidy, who chairs the Senate Health, Education, Labor, and Pensions Committee, was direct: "Congress needs to act to bring much-needed reform to the 340B Program. This investigation underscores that there are transparency and oversight concerns that prevent 340B discounts from translating to better access or lower costs for patients."

Washington can learn from this federal investigation. Or Washington can pass HB 2145 and make the problem worse.

Who Really Benefits From HB 2145?

Follow the money.

Large hospital systems in Washington stand to maintain billions in revenue if HB 2145 passes. For-profit pharmacy chains like CVS and Walgreens protect lucrative contract pharmacy arrangements. Pharmacy benefit managers preserve their cut of 340B profits—which can exceed 50 cents of every dollar.

Who doesn't benefit? Patients with chronic diseases who struggle to afford medications.

Employers trying to control healthcare costs for their workers. Taxpayers funding a program that's supposed to help the poor but enriches the wealthy instead.

What Washington Patients Should Do Now

If you're managing diabetes, cancer, heart disease, or any chronic condition in Washington, HB 2145 threatens to make your healthcare more expensive.

• Contact your state legislators. Tell them you oppose HB 2145. Ask them to support real 340B reform with transparency and patient protections.
• Share your story. If you've struggled with medication costs, if you've been charged full price for a drug your hospital bought at a discount, if you've had to travel far for specialty care—lawmakers need to hear from you.
• Ask questions. How much 340B revenue do you generate? What percentage goes to charity care? Will you commit to passing discounts directly to patients?

Join the Patient's Right to Know Campaign. Visit patientsright2know.org to learn more about 340B reform efforts nationwide.