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New Report: Hospitals, clinics and for-profit partners pocketed $142B in 2025 from 340B
As football season kicks off, hospitals keep scoring on 340B
The stadium names are visible. How 340B profits are spent is not.
As football season kicks off, fans across the country will see the names of hospitals and health systems displayed prominently on stadiums and arenas. Headlines about non-profit hospital spending on purchases that have no direct patient impact – like stadium naming rights – raise broader questions about how these hospitals allocate financial resources.
Those questions are especially relevant in the 340B program, where hospitals generate significant revenues from discounted medicines but face limited requirements to report how those funds are used or whether they directly benefit patients.
It’s time to ask, if patients aren’t benefiting, where’s the money going?
Running up the score: Congress created the 340B program in 1992 to help safety-net providers help vulnerable patients have access to affordable medicines. Today, it has become a multi-billion-dollar hospital markup program that allow large non-profit hospital systems to generate significant profits with little transparency or accountability for how those profits are spent.
The playbook: The business model is straightforward: participating hospitals and clinics can purchase medicines at steep discounts, mark them up by thousands of dollars and keep the difference. That growth has transformed 340B from a targeted safety-net program into the second-largest federal drug program, while leaving few requirements for how hospitals use the revenue they generate.
And there is no requirement that patients receive the savings.
Hospitals win, patients lose: The lack of accountability has real consequences. Today drug spending per commercial patient is on average 200% higher at 340B hospitals than at non-340B hospitals, and many of those hospitals continue to aggressively pursue patients for unpaid medical bills. So who is actually benefiting?
Patients, employers and taxpayers deserve to know where the money is going, and why a program created to help vulnerable patients can leave them facing higher costs.
The final score: Weak oversight has allowed large hospital systems to turn what was once a safety-net program into a lucrative revenue stream, with limited accountability for how those dollars are spent. It is time for federal reform to strengthen transparency and oversight and require that 340B benefits low-income and uninsured patients with access to lower cost medicines.
Learn more at PhRMA.org/340B.
Molly Jenkins
It's time to modernize 340B: The case for a rebate model
The Health Resources and Services Administration’s (HRSA) announcement of the revised 340B Rebate Model Pilot Program is an important step to bring greater transparency, accountability and integrity to a program that has grown in size and complexity.
The context: The 340B program has expanded far beyond its original purpose, growing into a massive revenue stream for big hospital systems with little evidence patients benefit. It’s now the second largest federal drug program yet operates with minimal transparency or accountability.
What to know about a rebate model:
- It improves transparency and accountability. Today, hospitals and clinics receive the 340B discount without first having to verify the prescription is eligible. A rebate model inserts transparency and accountability into the system up front, better aligning the 340B program with the way the rest of the health care system currently operates. Prescribe, verify, then rebate, so the discount is only paid after eligibility is confirmed.
- It cracks down on waste, fraud and abuse. Federal watchdogs have repeatedly flagged the program's lack of safeguards against claiming more than one discount on the same prescription, despite federal law not authorizing it. A rebate model provides transparency into claims-level data needed to help prevent unauthorized duplicate discounts.
- It provides rapid verification. A rebate model relies on data hospitals and clinics already routinely collect and submit for billing and reimbursement to provide rapid verification of claim eligibility. Other approaches are inherently retrospective and either would rely on voluntary compliance or require significant government resources for data verification and enforcement.
- It protects patients and taxpayers. Patients get their medicine exactly as they do today - nothing changes at the pharmacy counter. What does change is the 340B price is paid out to hospitals after eligibility is confirmed, closing a gap that has let costs climb for patients, taxpayers and employers alike.
The bottom line: A rebate model offers a straightforward, scalable way to modernize an outdated program, bringing rapid verification and real accountability while preserving support for true safety-net providers and the patients they serve.
Learn more at PhRMA.org/340B.
Elise Shutzer
ICYMI: Fox business hosts call 340B a ‘Rotten System’ and ‘Cash Cow’ for hospitals
Scrutiny of the 340B program continues to gain traction in Washington and in the media. Across multiple Fox Business segments—including Varney & Co., Mornings with Maria and The Big Money Show—hosts and correspondents described the program as a “rotten system” and a “cash cow” for hospitals while highlighting concerns that 340B lacks accountability and may benefit hospitals more than patients.
What they’re saying: Fox Business coverage focused on growing concerns about waste, fraud and abuse in federal health care programs, including how some hospitals can buy medicines at steep 340B discounts and then charge patients significantly higher prices.
Without clear rules requiring those savings to be passed on to patients, hospitals can pocket the difference, raising serious questions about where 340B profit is going and whether patients are benefiting.
340B was once a small safety net program to help underserved patients afford medicines. As the program has drastically expanded, so have concerns that hospitals and their for-profit partners are using 340B as a profit stream, with limited transparency, accountability or evidence that patients are receiving lower costs or improved care.
Hospitals buy drugs at discounts of nearly 60% off of the list price, on average, but sometimes pay as little as a penny. They are then allowed to pocket the difference between what they pay and their reimbursement from insurers and patients.
Growing momentum for reform: As Fox Business highlighted, 340B has grown into the nation's second-largest prescription drug program. But they aren't the only ones taking notice.
- Senate HELP Committee Chairman Bill Cassidy's (R-LA) recently released a discussion draft to reform the 340B program. In the Fox segment, Cassidy observed that hospitals are "using these dollars however they see fit" and said lawmakers "just want some accountability."
- The Congressional Budget Office (CBO) reported that 340B increases federal spending, raises prices for taxpayers by encouraging the use of more expensive drugs, and reduces rebates for employers.
- HHS Secretary RFK Jr. recently described the program as a "boondoggle," adding to a growing chorus of policymakers calling for reform.
Bottom line: As both lawmakers and the media continue to examine the 340B program, pressure is mounting to demonstrate that program is delivering for patients, not just generating revenue for hospitals.
Learn more at PhRMA.org/340B.
Eliza Maciag
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