The Pharmaceutical Research and Manufacturers of America launched a new campaign today to highlight how big, tax-exempt hospitals are abusing a little-known federal program called 340B to markup medicines while patients, taxpayers and employers pay the price.
The campaign, “Meet Mark,” sheds light on how big hospitals often pocket steep discounts on medicines, sometimes buying them for as little as a penny, and then turning around and marking up the price by thousands of dollars to boost their profits at the expense of patients.
Why this matters: The little-known federal 340B program originally was supposed to help low-income and uninsured patients afford medicine, but because the program has no transparency or guardrails on how hospitals and clinics use 340B profits, the money often isn’t going to help patients afford medicines.
Instead, the program that initially helped less than 100 safety-net hospitals has ballooned into a massive hospital markup program, providing a nearly $65 billion revenue stream to more than half of all hospitals and serving as a profit center for PBMs and chain pharmacies. If patients aren’t benefiting, where is the money going?
By the numbers:
- 340B medicine markups can be as high as 1,000% or more, saddling patients, taxpayers and employers with a hidden tax.
- Growing abuses are also placing a multi-billion-dollar burden on federal and state budgets.
- Half of every dollar spent on brand medicines goes to entities that don’t make medicine, including 340B hospitals, which collect 18 times more in program profits than they did a decade ago.
- The 340B hospital markup program is now the second-largest federal drug program, and on track to be the largest by 2027, surpassing all of Medicare and Medicaid.
As 340B hospitals continue to exploit the 340B program, the need for federal reform becomes more urgent.
- Thankfully, policymakers are taking note: A recent Congressional investigation into how covered entities use and generate 340B revenue is a sign of momentum.
- The Trump administration’s rebate pilot is also a positive first step toward cracking down on hospital abuses through greater transparency and accountability.
The bottom line: When hospitals have free rein to markup medicines, everyone pays the price. It is time to stop tax-exempt hospitals from rampantly abusing the program and ensure that the program benefits low-income patients by lowering their medicine costs.
Congress should fix 340B.
Alex Schriver
Alex Schriver currently serves as Senior Vice President of Public Affairs at the Pharmaceutical Research and Manufacturers of America (PhRMA). Schriver leads the communications team responsible for earned, paid, digital and social media, as well as executive visibility. Schriver has extensive experience in communications, campaigns, and crisis management. He has advised global corporations, government leaders, and corporate executives throughout his career.
Alex Schriver