Texas manufacturers are not immune to rising healthcare costs. They show up in premiums, wages, and hiring decisions that touch the lives of more than 969,000 Texans working in the manufacturing sector. According to the most recent Manufacturers’ Outlook Survey, 70% of manufacturers cite rising healthcare and insurance costs as their primary concern.
And it isn’t just the members of the Texas Association of Manufacturers; Texas families are feeling it too. A recent University of Texas/Texas Politics Project survey finds 63% of Texas voters say they’re “very concerned” about the cost of healthcare.
Manufacturers and other employers need confidence that the healthcare system is working as intended. And while the drivers of healthcare costs and opportunities for reform are complex and wide-ranging, there are some straightforward ways to increase transparency, accountability, and patient-focused outcomes.
One is the modernization of the federal 340B Program, a program that likely flies under the radar for most Texans. Named after the section of a 1992 law that created it, 340B was designed to help ensure low-income and rural patients have access to affordable medicines by allowing hospitals to purchase drugs at discounted prices and pass those savings along to patients.
That mission remains important today, perhaps more than ever, but the problem is that over time, the program has been grossly exploited, and savings are not making their way to families in need. As the program has grown over the years, transparency has not kept pace.
The 2025 Congressional Budget Office report found hospital spending on 340B drugs grew from $6.6 billion in 2010 to $43.9 billion in 2021, a nearly sevenfold increase with no clear evidence that the increase in discounted drug purchasing translated to corresponding consumer savings.
When we also consider a recent analysis from healthcare thinktank KFF, which details what’s driving increased national healthcare spending, we should be asking important questions about whether the 340B program and its incentives may be contributing to broader cost concerns for consumers.
Right now, without clear accountability, we don’t have clarity on whether 340B savings are reaching the very patients the program was designed to serve. A lack of transparency makes it difficult to assess whether the program is delivering on its original intent or simply generating revenue that is disconnected from patient care.
We know hospitals, especially in rural Texas, are struggling and 340B can play an important role for community healthcare. Patients need to know they can get the care and prescriptions they need where and when they need them. Reforming the 340B program through transparency and accountability is an opportunity to strengthen this important program and better serve Texans. Hospitals that participate should be able to demonstrate how program savings support charity care, expand access, and reach underserved communities.
A potential solution under consideration by policymakers and regulators would pilot a rebate-based approach, in which covered entities would pay upfront and then submit claims data so eligibility can be verified before receiving the 340B discount. To ensure this pilot is effective, the federal government needs strong data, free from carve-outs and exemptions. Broad participation is important because limiting participation risks undermining the very transparency the pilot is designed to deliver.
Those who are effectively using 340B savings to improve access to care should welcome the opportunity to demonstrate that success. Policymakers and employers need reliable data, and patients deserve to know resources intended to support them are being used as promised.
The future of the 340B program should focus on access and accountability, not one or the other. Transparency should be a point of agreement, and federal 340B reform represents an important part of broader, long-overdue healthcare reform.
Editor's Note: The above commentary was penned by Tony Bennett, president and CEO of the Texas Association of Manufacturers. The commentary appears in the RGG Business Journal with the permission of the author.
