A powerful group of conservative interest groups and activists penned a letter last week to Republican congressional leaders asking them to rein in a program that provides discounted outpatient drugs to rural Americans, alleging that it is being abused by hospitals for financial gain. Many of the letter’s signatories, however, are funded by the pharmaceutical industry, which stands to gain from reforms to the program.
“The 340B program is supposed to help hospitals provide care to indigent populations at low or no cost, but it is now routinely used fraudulently,” the letter reads. “Hospitals serving low income areas receive the medicines at low or no cost, but then distribute them throughout a vast hospital network, specifically targeting affluent areas, and increasing the price for everyone.”
Nine of the groups that signed the letter have received funding from Pharmaceutical Research and Manufacturers of America, better known as PhRMA, the primary trade organization representing the pharmaceutical industry. The 340B program forces drug manufacturers to sell their products at lower prices to certain rural healthcare providers, cutting into profit margins.
Many of the organizations signing the letter have pulled in six-figure sums from PhRMA.
The Center for a Free Economy, for instance, reeled in over $500,000 in contributions from the trade association between 2022 and 2023, about a third of its total revenue during the latter year. Consumer Action for a Strong Economy, meanwhile, brought in $315,000 in PhRMA contributions between 2021 and 2023.
Other signatories that took significant amounts of money from PhRMA between 2021 and 2023 included the Trade Alliance to Promote Prosperity, which took $175,000, American Commitment, which received roughly a quarter million dollars, Competitive Enterprise Institute, with $210,000 in PhRMA funding, and the Council for Citizens Against Government Waste, which took in $100,000 between 2019 and 2020.
Some organizations, such as the 60 Plus Association, Freedom Foundation of Minnesota, and Frontiers of Freedom, took in smaller, five-figure sums from the pharmaceutical industry over the years.
Links to PhRMA don’t stop at financial ties.
Ryan Ellis, the first name to appear on the list of signatories, is a lobbyist registered to work on behalf of PhRMA. Ellis heads the Center for a Free Economy in addition to his work as a policy consultant with Akin Gump.
“[Center for a Free Economy] does not discuss past, current, or future donors, either to confirm or deny,” Ellis told the Washington Examiner when asked about the PhRMA contributions. “We protect our donors’ privacy from left-wing cancel culture. CFE is a policy driven organization. It works on what it believes in THEN seeks support from the general public to fund those efforts. That’s the causality sequence, and I’d never work any other way. The moment I did, I’d lose all my credibility and effectiveness.”
HOW BIG PHARMA’S WEB OF INTERESTS GROUPS PUSHES ITS AGENDA ACROSS THE COUNTRY
The push to reform the 340B program pits two traditionally Republican priorities against each other: reining in government regulation, often blamed by drug manufacturers for inflating consumer prices, and providing cheap medical care to constituents in rural America.
Pharmaceutical interests point to scandals in which nonprofit healthcare providers have been caught abusing the 340B program as evidence of widespread fraud, cutting in favor of reform. A Senate committee report released in April by Sen. Bill Cassidy (R-LA), for instance, alleged that Bon Secours Mercy Health had pocketed $276 million in savings accrued through use of the program.
Hospital groups, meanwhile, argue that the 340B program already requires that healthcare providers meet stringent requirements to participate and that the low-cost medications are crucial to providing services to people living in rural or otherwise underserved areas.
In addition to the 340B program, the letter touched on other issues, including Medicaid reform and tax policy.
The pharmaceutical industry has a robust influence network, paying for lobbying campaigns, media influence operations, and advocacy operations across the country.
None of the signatories mentioned above, except CFE, returned requests for comment.