(The Center Square) – The Washington state House Appropriations Committee has advanced a bill concerning a federal drug pricing program known as the 340B Program that one committee member described as a “a cash grab for one major hospital system in Seattle.”
“I do not feel or do I not believe that the state has the constitutional authority to actually implement these very burdensome regulations or on one side, but then just unfettered expansion in the wake of 12,000% expansion, in the last 16 years,” Rep. Matt Marshall, R-Eatonville, told colleagues prior to its Monday vote on Senate Bill 5981.
“This is not doing anything to directly address the needs of safety net providers in rural communities,” he added.
The 340B Program allows drug manufacturers to provide heavily discounted drugs to participating hospitals and clinics, which then charge full price to patients. At $81 billion, it is now the second largest federal prescription drug program.
Under SB 5981, a manufacturer or third party would be prohibited from restricting entities from acquiring drugs under the 340B Program created by the federal government in the 1990s.
The bill also prohibits manufacturers and third parties from requiring covered entities to provide data in order to acquire those drugs. Further, the bill requires covered entities and drug manufacturers participating in the program to both report information and pay a filing fee to the state Health Care Authority.
Recent studies have questioned the rates charged by providers. A February report by IQVIA concluded that 340B hospitals collected $1.8 billion nationwide between 2024-2025 by overcharging public employees.
“When state public employee health plans pay for 340B drugs, patients and state taxpayers bear the cost,” the report states.
In Washington state, it found that 340B Program markups were 131%.
A 2025 nonpartisan report by the Congressional Budget Office concluded that the program “encourages behaviors—including the prescription of more and higher-priced drugs, the expansion of services, and the integration of hospitals and off-site clinics—that tend to increase federal spending. In many cases, the evidence about the behaviors is limited, and the magnitude of each is unknown.”
However, Rep. My-Linh Thai, D-Bellevue, told Appropriation colleagues that SB 5981 “is about protecting safety net providers in our state. And who are these safety net provider? They are the people or the organization that provide support and care for those who otherwise wouldn’t get these services asking for your support.”
Yet, Marshall argued that “the concern is arising that the expansion of these contract pharmacies is going into very affluent areas where the population that will be benefiting from the pharmacy is not necessarily the populations that is at need.”
He added that other states have been sued over similar legislation, and Washington faces a similar outcome if SB 5981 is passed.
“We’re going to be binding the state into litigation that has going to be…almost certainly years and end-up in the Supreme Court. The Supremacy Clause is clear and this is just an uncontrolled expansion.”
