The 340B Drug Discount Program was created to aid vulnerable patient populations, but it has ended up both wasting money and failing to provide the intended benefits.  Instead, hospitals and contract pharmacies are profiting off of the program and there is insufficient accountability and transparency.

In 2023, 340B hit a record $66 billion in discounts from pharmaceutical manufacturers to hospitals.  In addition to federal reports citing structural and systemic issues, like the June 2015 Government Accountability Office report that foundMedicare beneficiaries were prescribed more drugs and/or more expensive drugs at 340B hospitals, states are also reporting on the program’s shortcomings.  A November 25, 2024,  Minnesota Department of Health report found that the largest hospitals or 13 percent of the total, received 80 percent of the revenue, leaving smaller hospitals to struggle.  A January 23, 2025, fiscal analysis of 340B contract pharmacy mandate legislation in Utah found that a 10 percent increase in 340B drug purchases could increase annual costs by $1,987,700 for the Public Employees Health Program.   

Taxpayers are feeling the impact of 340B disproportionate share hospitals charging five times the acquisition cost for oncology drugs.  In 2016, this led to $1.9 billion in profits for hospitals on the back of taxpayers and Medicare.  Medicare payments for 340B drugs under Part B were 48 percent higher than the 340B ceiling price. 

Medicare Part D costs are also higher since an extra discount from manufacturers is not typically owed on Part D prescriptions filled at 340B hospitals or contract pharmacies.  As the 340B program expands, an increasing number of Part D prescriptions do not include price rebates.  Employer-sponsored health plan costs are also impacted as more 340B discounts replace rebates for health plans.  A March 12, 2024, IQVIA report found that 340B increases costs by more than $5 billion annually for employer health plans regulated under ERISA.  That means employees and employers are left with less taxable income, which reduces federal and state tax revenue.

The 340B drug discount program is currently ripe for reform, and there is some hope that the 119th Congress could bring the program closer to its original intent.  Sen. Bill Cassidy (R-La.) is planning to make 340B reform a top priority in 2025.  The Council for Citizens Against Government Waste has long advocated for reforms that include a clear patient definition, increased transparency, improved oversight, and reduced duplicate discounting, which would help to stop the abuses, give patients the discounts they deserve, prevent the waste of taxpayer dollars, and improve efficiency.  340B reform should not only should be acted on by Congress, but also reviewed by DOGE.