New analysis finds 340B hospitals push patients toward costly care to boost profits

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What you need to know: Big tax-exempt hospitals are shifting care away from doctor’s offices and to more expensive hospital settings, which allows them to further exploit the 340B hospital markup program and boost revenue, according to a new report by the Berkeley Research Group (BRG). This drives up costs for patients, taxpayers and employers, adding to the affordability crisis in American health care.

Hospitals are fueling higher patient costs. Under the 340B program, tax-exempt hospitals can buy medicines at steep discounts and then charge large markups for the same medicines.

The share of Medicare Part B medicines administered by 340B hospitals doubled over the last decade, according to the new report. Over the same period, the share of Part B medicines administered in physician offices and non-340B hospitals steadily declined.

This shift in care was especially acute for certain cancer therapies.

Breast cancer: 340B hospitals captured nearly half of all claims, doubling their share of the market from 23.1% in 2012 to 49% in 2024.
Multiple myeloma: Physician offices experienced the same decline, while the share at 340B hospitals more than doubled—from 23% to 49%.

The findings echo an investigation by Bloomberg News that found hospitals are reaping massive profits off cancer patients—with patients paying vastly different prices for the same oncology medicine.

Vertical integration of big hospital systems is driving this troubling trend. As BRG explains:

“While independent physician practices are generally ineligible for the 340B program, once offices are purchased by a covered entity outpatient medicines for patients treated at these facilities become eligible, expanding the 340B hospital’s 340B revenue potential.”

An assessment by the nonpartisan Congressional Budget Office found the program “encourages behaviors...that tend to increase federal spending,” including integration of off-site clinics and the use of more and higher-priced medicines. According to another study, vertical consolidation is one of the things leading 340B to drive up costs to the government and employers.

The bottom line: 340B has ballooned into an $81 billion program, the second-largest federal prescription drug program, yet most Americans have no idea the program is impacting what they pay for health care. Any effort to improve health care affordability can’t overlook the 340B hospital markup program. Republicans and Democrats agree the program is broken. It’s time to fix 340B.

Learn more at PhRMA.org/340B.

Elise Shutzer

Elise Shutzer currently serves as Vice President of Public Affairs at PhRMA, leading issue communications for key topics including cost and access, hospitals, as well as strategic insights which oversees polling and message research activities. Shutzer is a seasoned leader with extensive experience in public policy advocacy, grassroots and public affairs. She most recently served as the Global Corporate Issue Head for Sustainability and Circularity at ExxonMobil leading advocacy campaigns on plastic waste, the circular economy and other environmental issues. Previously, Shutzer ran the energy and environmental grassroots and coalition development program at The Pew Charitable Trusts, and she spent over a decade at the Dewey Square Group, a prominent public affairs and communications firm.

Elise Shutzer

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