April 16, 2026
Minnesota Senate
Commerce and Consumer Protection Committee
75 Rev. Dr. Martin Luther King Jr. Boulevard
Saint Paul, Minnesota 55155
Dear Senator,
Today, the Senate Commerce and Consumer Protection Committee is expected to vote on SF 4365. On behalf of the 6,307 members and supporters of the Council for Citizens Against Government Waste (CCAGW) in Minnesota, I urge you to support striking the provisions blocking the scheduled repeal of a 340B Drug Pricing Program contract pharmacy mandate and oppose the bill if it is not removed.
To participate in Medicaid, Section 340B of the Public Health Service Act requires drug manufacturers to help federally funded clinics and public hospitals that serve a large uninsured population cover the cost of drugs and provide discounts to patients. However, the lack of a clear definition of an eligible patient, along with poor oversight, have led to the program being exploited by hospitals and contract pharmacies to generate millions of dollars in profit. A September 9, 2025, Congressional Budget Office report showed how the nationwide costs of the 340B program rose from $2.4 billion in 2005 to $6.3 billion in 2023. The 340B contract pharmacy mandate that Minnesota legislators scheduled for automatic sunset on July 1, 2027, costs Minnesota’s employers and workers $31 million in foregone rebates annually and public employee health insurance plans $5 million annually.
On February 27, 2026, the Minnesota Department of Health (DOH) issued its second report on Covered Entities in the state. They received at least $1.34 billion in 340B revenue in 2024, 112.7 percent more than the $630 million reported for 2023. The largest hospitals received more than $1 billion, or 80 percent of the revenue. The highest profit from 340B was $339 million at M Health Fairview University of Minnesota Medical Centers, 163 percent greater than the $129 million in 2023. The Minnesota DOH report should be a wake-up call not only for Congress to reform 340B by requiring verification of patient eligibility and disclosure of 340B profits by each participating entity, but also for Minnesota lawmakers to forgo extending the program’s abuses. The states’ role in 340B should be limited to requiring greater transparency and accountability for program expenditures. But the 340B contract pharmacy mandate language included in SF 4365 would not only expand the enforcement powers of the Minnesota Attorney General’s Office, which, in the wake of the Medicaid fraud scandal, has proven itself ill-suited to protecting taxpayers or patients, but also fail to provide 340B spending transparency.
Rather than blocking repeal of the contract pharmacy mandate and raising the cost of 340B in Minnesota, I urge you to contact your congressional delegation and ask them to reform the program. Again, I ask that you support striking the provision extending Minnesota’s 340B contract pharmacy mandate from SF 4365 and oppose the bill if it is not removed.
Sincerely,
Tom Schatz
President, CCAGW