Failed 340B bill raises concerns for rural health care providers

Legislation supporting a government drug subsidy program for rural and low-income community clinics failed to pass the Minnesota House during the 2026 legislative session. The 340B Drug Pricing Program is scheduled to sunset July 1, 2027. If the program expires, rural health care providers could face additional financial challenges.

The 340B program allows health care providers serving low-income and rural communities to purchase prescription drugs at discounted prices. Patients typically pay standard drug costs, while providers use revenue generated through the program to help offset financial losses.

Hospitals and clinics often provide services that are not fully reimbursed by Medicare, Medicaid or private insurance. Providers may also absorb losses from uninsured patients who cannot afford to pay the full cost of care.

In addition to removing the July 1, 2027, sunset date, the failed legislation would have strengthened requirements for pharmaceutical companies to participate in the program and authorized the Minnesota attorney general to enforce compliance.

“Many of my colleagues are telling us that the pharmaceutical companies are not honoring the 340B legislation as it exists, and so that’s why they wanted to put the enforcement provision in,” North Shore Health CEO Kimber Wraalstad told WTIP.

Pharmaceutical companies have argued that the 340B program lacks sufficient oversight. Some critics contend that uncompensated care accounts for a relatively small share of hospital losses and that hospitals use the program for asset growth rather than to expand patient services.

“What is it they’re defining by asset growth?” Wraalstad said. “When we did our remodel, that’s considered asset growth. When we purchase CT scanners, that’s considered asset growth. When we replace beds, that’s considered asset growth. I would like to have a conversation with pharmaceutical companies about their actual increase in shareholder returns and their increase in revenue.”

Drug manufacturers have also argued that the program reduces the value of rebates available to insured patients and results in lost state and local tax revenue.

Wraalstad said she was skeptical those rebates would remain available if the 340B program were eliminated.

“I absolutely have a problem with a pharmaceutical company that is able to put a full-page color ad in the Cook County News Herald talking about 340B legislation,” Wraalstad said. “When in my own community organization, we look at how we best provide information and news and advertisement, and we don’t do that, but they’re able to.”

Congress established the 340B Drug Pricing Program in 1992. In 2024, the Minnesota Legislature passed a law prohibiting drug companies from discriminating against providers participating in the program, though the law does not include an enforcement mechanism.

The 2026 bill passed the Senate on a 42-24 vote but failed in the House on a 67-67 tie vote.

WTIP spoke to Wraalstad about the 340B program. Audio of that conversation can be found below.

Josh Hinke June 12, 2026