Expanding broken federal program won’t bring California patients relief

OPINION – As someone who lived with hepatitis C, I know what I and others have had to experience to navigate the health care system, having to both manage my condition and ensure that we can access and afford the treatments needed to stay healthy. Medication to cure hepatitis C saved my life, but getting access was a complicated process. Programs like the federal 340B program are supposed to make medications more accessible for vulnerable patients, but unfortunately, the reality is far from it.

Originally created to help underserved and low-income patients access essential medications, the 340B program has evolved into something far removed from its original mission. Under the program, health care entities can purchase deeply discounted medications with the expectation that savings will be used help patients access medicines they need or in reduced-cost care or services. However, this well-intentioned program has morphed into a profit maximizer for national chain pharmacies that 340B contracts with.

As a result of the partnership with 340B health care entities, contract pharmacies are able to reap massive profits from the program simply for dispensing 340B medications – profits that should be reinvested in patient care. Given just how lucrative 340B can be for these huge pharmacies, 340B contract pharmacy growth has skyrocketed in recent years. Contract pharmacy arrangements with 340B have grown from fewer than 2,000 in 2010 to more than 200,000 in 2024.

Yet, this growth hasn’t translated into better care or lower costs for patients. Less than half of the 340B providers surveyed by the Government Accountability Office (GAO) provide discounts to low-income, uninsured patients at some or all of their contract pharmacies. Contract pharmacies are increasingly clustered in affluent communities or even out-of-state, which is especially concerning when we know low-income patients are intended to be the true beneficiaries of 340B. Only 23% of 340B contract pharmacies are actually in medically underserved areas. In California, there are over 3,500 contracts with 340B pharmacies – 40% with out-of-state pharmacies. In fact, in my neighboring district nearly 60% of contract pharmacies are located outside California, with only 20 located within the district itself. For rural Californians in my county of Sonoma, this means traveling long distances to access medication that are supposed to be affordable and accessible.

This disconnect between intent and reality is not just a policy flaw – it’s playing out in real communities. Some clinics offer clear examples of why urgent reform is needed. For example, Health and Life Organization Inc (HALO) failed a federal audit yet still operates nearly 100 contract pharmacies, many tied to large chains, while patients report poor care and its executives earn over $700,000 in combined salaries. Similarly, Southern California Medical Center (SCMC) paid $15 million to settle Department of Justice allegations involving kickbacks and self-referrals but remains in the 340B participant with more than 40 contract pharmacy agreements.

These kinds of abuses not only undermine the credibility of the 340B program but also put independent pharmacies – often the only health care access point in rural communities – at a serious disadvantage. As many chains dominate the program for financial gain, smaller, community-based pharmacies are being pushed to the brink by contract terms and fill rates that favor high-volume, deep pockets and national reach.

Assembly Bill (AB) 1460 was introduced to ‘fix’ the program, but it does more harm than good. It fails to ensure that 340B savings go directly to patients and does nothing to protect the independent pharmacies that serve as lifelines in underserved and rural areas. Notably, the Service Employees International Union (SEIU) has voiced concerns over the program’s lack of transparency – specifically, how the savings are spent and whether they are truly benefiting those in need. Their concerns underscore a growing consensus: what’s needed is greater accountability, not unchecked expansion.

Patients in California eligible for 340B – especially those in rural, medically underserved areas – need assistance programs that fulfill their original promise of improving affordable access to medications. Instead, lawmakers are advancing legislation that would expand a broken system without addressing its foundational flaws.

Allowing 340B to grow without ensuring patient benefit or community reinvestment will only deepen disparities and harm the very populations the program was designed to support.

Lawmakers must take a hard look at who truly benefits from AB 1460. I urge them to reject this bill and demand real reform that puts patient access, transparency, and community health first.

Bill Remak is a resident of Petaluma, Sonoma County and a former hepatitis C patient.