April 28, 2026
The Honorable Kathy Hochul
Governor of New York
State Capitol
Albany, NY 12224
Dear Governor Hochul:
On behalf of the National Taxpayers Union (NTU), America’s oldest taxpayer advocacy organization, I respectfully urge you to oppose the proposed 340B contract pharmacy legislation included in the Senate’s one-house budget resolution and standalone bill S.1913. Without meaningful reform to the federal 340B Drug Pricing Program, this bill will drive up health care costs for all New Yorkers. As written, the provisions would cement and expand one of the most controversial aspects of the program rather than address the underlying flaws driving up the cost of care for patients across the state. New Yorkers are already footing the bill for the program’s shortcomings and perverse incentives, and doubling down on it would only make matters worse.
As both a former pediatric nurse practitioner (PNP) and Wisconsin state senator, I know firsthand the challenges associated with the 340B Drug Pricing Program.
As a nurse practitioner, I worked in settings that participated in the program and cared for patients it was meant to help—families struggling to afford lifesaving medications and parents desperate to manage a child’s chronic illness.
As a legislator, I saw how well-intentioned federal programs can drift from their original mission when accountability is lacking, creating unintended consequences that fall on taxpayers and state budgets.
That’s exactly what has happened with 340B.
The program was created in 1992 to help low-income and uninsured patients access affordable medications. But in reality, it has become an opaque revenue stream for hospitals and pharmacies, with little accountability to ensure that savings are passed on to patients. The result is simple: taxpayers lose, patients lose, and the biggest winners are large hospital systems and pharmacy chains turning 340B into a profit center. Evidence from several states makes this clear:
- A 2025 Pioneer Institute report found that 64% of New York’s 340B contract pharmacies are located in affluent neighborhoods, far from the underserved communities they were intended to serve.
- Utah is projected to lose nearly $2 million in rebates due to even a modest increase in 340B purchases—costs that taxpayers will ultimately absorb.
- North Carolina found hospitals charging cancer patients five times the actual drug cost, leaving patients crushed by bills and taxpayers saddled with a $32 billion unfunded liability in the State Health Plan.
- Minnesota reported that 340B hospitals generated at least $630 million in net revenue, with little transparency about whether low-income patients actually benefited.
New York experiences similar challenges within its health care system. 340B costs Empire State employers and workers $446 million annually. It adds an additional $89 million each year in upcharges on self-administered drugs alone. According to the Empire Center for Public Policy, “some of New York’s largest and most prosperous hospitals”—all 340B participants—each reported over $100 million in revenue from pharmacy sales in 2024, growing six-fold or more since 2019.
Meanwhile, health care is becoming less affordable, not more. New York small businesses, for instance, are facing an average premium increase of 13%.
S.1913 does not solve this crisis. Instead, it would worsen it by reinforcing a 340B system that already lacks sufficient transparency and accountability. New Yorkers still do not have a clear picture of how much money hospitals and pharmacies are making through the program, whether those savings are being passed on to low-income populations, or how much of the cost is being shifted onto employers and patients. Instead of answering those basic questions, S.1913 would further protect and expand the status quo. That is the wrong approach.
As a former nurse practitioner, I cannot ignore that many patients who need help continue to fall through the cracks. As a former state senator, I cannot ignore that taxpayers are subsidizing a program with little accountability and uncertain value. Both burdens are real—the fiscal and the human—and I urge you to protect New Yorkers from both.
The bottom line is simple: New York should reject any attempt to entrench serious flaws in its health care system. Please oppose both S.1913 and the bill’s language in the Senate budget resolution. Policymakers must demand accountability for taxpayer dollars before seeking to expand the 340B Drug Pricing Program.
Thank you for your time and your thoughtful review of this critical issue.
Respectfully submitted,
Leah Vukmir
Senior Vice President of State Affairs
National Taxpayers Union
lvukmir@ntu.org