CBO Confirms That 340B Drives Up Costs for Taxpayers
The Congressional Budget Office (CBO) has confirmed what the Council for Citizens Against Government Waste (CCAGW) has long been saying about the 340B drug discount program. The September 9, 2025, CBO report noted that 340B has grown substantially and increases costs for taxpayers. The CBO report also underscores several reasons why reforms to the 340B program are long overdue.
The report stated that 340B “encourages behavior – 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.”
According to the Health Resources & Services Administration, in 2005 340B covered entities purchased $2.4 billion in drugs, and that total had skyrocketed to $66.3 billion, making it the second largest federal prescription drug program after Medicare. CBO noted that the 340B program tends to buy more expensive drugs, including cancer drugs and anti-infective drugs, which drives up the cost of the program. Between 2010-2021, CBO reported a 19 percent increase in average annual spending, while spending on brand-name drugs nationwide increased an average of 4 percent annually. CBO determined that two-thirds of 340B growth was caused by the integration of hospitals and off-sites clinics, expanded facility eligibility following expansion under the Affordable Care Act, and the 2010 revision in program guidance that permitted hospitals to start contracting with multiple contract pharmacies.
House Energy and Commerce Committee Chairman Brett Guthrie (R-Ky.), who along with Senate Health, Education Labor & Pensions (HELP) Committee Chairman Bill Cassidy (R-La.), requested the CBO report, said, “today the Congressional Budget Office has further validated my long- standing concerns that the 340B program – while an important lifeline to many of our safety net providers – has the ability to be abused and drive up overall health care costs for Americans. I’m committed to conducting the necessary work to making sure that the program works for both our safety net providers and patients.”
The CBO report confirms that CCAGW’s long-held concerns about the 340B program are valid and that reforms should be made, like those included in the September 8, 2025, letter from Citizens Against Government Waste to the Centers for Medicare and Medicaid Services supporting the 340B Model Rebate Pilot Program. Congress should establish a clear definition of an eligible patient, provide better verification of patient eligibility when the prescription is filled, determine a relationship between the patient and the covered entity, verify that services were provided within the past 12 months, and increase program transparency. The CBO report and the April 2025 Senate HELP Majority Staff report should be used as an impetus to reform the 340B program.
