Letter to the editor: The 340B program is out of control
January 26, 2026
One problem with a sprawling federal government is that programs can grow out of control without attracting much notice from regulators or the public. The 340B Drug Pricing Program is a prime example.
Originally intended to provide low-cost medicines to needy patients, 340B has morphed into an $81 billion profit engine for large hospital systems, pharmacy chains and pharmacy benefit managers, with little evidence that savings reach patients.
It allows certain hospitals and clinics to purchase outpatient medications at steep discounts with the expectation that the savings will be used to expand care for low-income and uninsured patients.
That’s not what is happening. Hospitals purchase medications at discounted rates and bill for them at much higher prices, driving up costs for health care purchasers, including employers and Medicaid. The Congressional Budget Office found that the program costs federal and state governments roughly $6.5 billion annually in lost Medicaid rebates.
We don’t know how big hospital systems spend their 340B profits because they aren’t required to share those funds with patients or explain how they use them. Lobbyists for big hospital systems are pushing state legislation to lock in this lack of transparency.
Meanwhile, instead of using 340B funds to expand access for the underserved, 340B hospitals are expanding their footprints in wealthier neighborhoods, turning off-site clinics, or “child sites,” into revenue generators.