Guest Columnist – A Prescription Drug Discount Program Being Exploited is Costing Colorado Workers More Money

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COLORADO LAWMAKERS MUST ACT TO REFORM, NOT PROTECT BAD ACTORS

Jason L. Wardrip

Business Manager, Colorado Building & Construction Trades Council

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In Colorado, working families are being squeezed at the pharmacy counter while large billion-dollar hospital systems are exploiting a program designed to help patients and underserved communities. The tremendous growth of the Federal 340B Program is now increasing costs to our unions’ health insurance, thus increasing costs for our hardworking tradesmen. Something must be done to shed light on the impacts of the unforeseen costs, and we must work to stop any action that continues to promote the program’s loopholes, allowing billions of dollars, meant to reduce costs for working families, go to large hospitals systems’ bottom lines.

Created in 1992, the 340B Hospital Markup Program began as a vital prescription drug discount program to support critical access hospitals and health care centers serving low-income and rural communities; and the program did just that for decades. Here’s how it works: hospitals buy medications at a significant discount from manufacturers through 340B, then turn around and charge insurance plans—and by extension, workers—in many cases outrageous markups, keeping the difference.

This is how it works

Today, the program is now unrecognizable due to lack of oversight, accountability and guardrails, allowing many large “non-profit” tax-exempt hospital systems to ‘buy low & sell high,’ turning it into a volume game and money-making operation—one that drives up costs on the backs of working Coloradans, showing little-to-no benefit to patients. Let me be clear, not every 340B entity is abusing this program, but a multitude of reports are showing that these large bad actors account for the exponential growth, while safety-net providers and patients are seeing less benefit and services, and costs are being shifted to Coloradans.

An example with figures

For example, a January New York Times article reported about a woman whose hospital purchased her cancer medications under the 340B discount for $2,700 and billed her insurance $22,700—and when the insurance company only agreed to pay the hospital $10,000, the hospital charged the patient $5,000 in out-of-pocket costs. The 340B program has ballooned from just $5 billion in 2010 to over $66 billion in 2023, bigger than Medicaid, with no ceiling in sight.

That means employers—whether it’s a union health trust, a small business, or even the state government—are paying more, while hospitals quietly pocket the difference without reducing prescription drug costs to patients. The CBCTC represents Colorado’s building trades, encompassing thousands of skilled journeymen and registered apprentices in 14 crafts in construction, such as our pipefitters, sheet metal workers, plumbers, laborers and electricians.

A Prescription Drug Discount Program Being Exploited is Costing Colorado Workers More Money

Many of these trades act as self-insured employers, providing health benefits for their union members. This is a tremendous benefit to our tradesmen, and our union trustees work hard to lower healthcare costs for their members. Our health funds lose negotiated prescription drug rebates if a member, unbeknownst to them,sought treatment at a facility owned by a 340B healthcare system. This cycle means higher drug markups, higher copays, and more money out of the pockets of hardworking Coloradans.

Defending our members

A 2025 IQVIA study found that in 2023, the 340B program cost $152 million in lost rebates for Colorado employers, or $45 per beneficiary. It also found state legislation that allow unlimited contract pharmacies, like Colorado SB71, will cost Colorado employers an additional $23 million annually in lost rebates. We support the original intent of the 340B program. If drug companies are paying billions in discounts, and patients and vulnerable communities are receiving reduced costs and increased services to that degree, a slight cost to our funds seems manageable. But that is not what is happening.

A Prescription Drug Discount Program Being Exploited is Costing Colorado Workers More Money

Colorado lawmakers must prioritize accountability before they consider expanding the program by looking under the hood to identify good stewards from bad, locate where the money is going, determine increased costs to the overall healthcare system, and put safeguards in place to ensure 340B serves its original purpose—helping patients.For these reasons, we urge Colorado lawmakers to support SB124, requiring meaningful transparency and patient benefit within the 340B program in Colorado, and oppose SB071, which only continues to protect the bad actors, costing Colorado workers, taxpayers and patients more money.

A Prescription Drug Discount Program Being Exploited is Costing Colorado Workers More Money

We also encourage legislators to ensure SB124 includes safeguards for rural hospitals—keeping their doors open and those patients served. Gov. Polis has made prescription drug affordability a priority, but without reform, the unchecked expansion of 340B will only make things worse. If legislators want to stand with workers, they must first stand up to the bad acting hospitals’ abuse of the system, and fix 340B before it costs workers even more.

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