340B Program Should Be a Priority for DOGE
As efforts to make the federal government more efficient get underway, 340B is a great place to start. This federal program allows qualifying hospitals to buy drugs at steep discounts and charge insurers and patients high prices. 340B has grown exponentially in the last few years, and that growth is driving health care costs higher.
A recent article by the New York Times tells the story of a patient who went for a cancer treatment and was given a drug with a list price of $2,700. The hospital that owned that facility (a participant in the 340B program) charged the patient’s insurance company $22,700. In the end, the patient was left with a hospital bill for $2,500 – more than half her monthly take home pay. Sadly, this story is all too common across the country.
The program was designed to help safety-net hospitals serving large populations of low income and uninsured patients buy prescription drugs at pennies on the dollar. This was meant to help these hospitals continue to provide or even expand their care. With little oversight, lax eligibility requirements, and regulatory rule changes, participation in the program has skyrocketed.
Rule changes by the Health Resources and Services Administration (HRSA) allowed participating hospitals to contract with an unlimited number of outside pharmacies to fill 340B prescriptions—allowing the hospitals, pharmacies, and pharmacy benefit managers (PBMs) to share the profits. Patients, insurers, employers and taxpayers are bearing the brunt of the cost.
Hospitals have identified ways to maximize profits from the program, including through the state legislative process. Despite 340B being a federal program, bills have been introduced in states across the country to require drug manufacturers to sell to all pharmacies that participate in the program (called “contract pharmacies”) at 340B prices. These bills have been challenged in court by pharmaceutical manufacturers with varying degrees of success.
Ultimately, 340B is a federal program, and fixes have to come at the federal level. There has been greater scrutiny of the program and increasing calls for reform over the past few years. In early 2024, a bipartisan group of six US Senators introduced a reform bill called the SUSTAIN 340B Act, which would have increased transparency and oversight of the program.
The Trump administration has signaled that increasing government efficiency and eliminating waste is a top priority. The new Department of Government Efficiency won’t have to look far for programs and departments that need work, but 340B should be near the top of its list.
More information about the 340B program:
Myths v Facts: 340B, Drug Discounts, and Price Fixing
340B Won’t Save Rural Hospitals Either