The U.S. House Energy & Commerce Committee’s Health Subcommittee today will host the third hearing in its health care affordability series, specifically examining the role providers and hospitals play in shaping the cost of care for Americans.
While the hearing will likely examine numerous issues, there is none more ripe for reform than the flawed 340B drug pricing program.
Originally enacted to help eligible safety-net providers buy medicines at steep discounts and pass the savings on to lower-income and vulnerable patients, the program has ballooned as a revenue stream for many participating hospitals and contract pharmacy chains.
As the size and complexity of the 340B program has expanded, participating hospitals and contract pharmacies have instead used the program to increase their own revenues – to the tune of $1.8 billion from 2024 to 2025 alone – rather than helping consumers, who were the law’s intended beneficiaries.
Study after study into that failure over the years has exposed how participating providers hoard tens of billions of dollars each year from drug sales occurring under the 340B program. In fact, some of those hospitals went so far as to charge full prices to patients for discounted drugs, only to pocket the difference. Federal agencies tasked with administering the 340B program have highlighted transparency concerns and the inability to accurately audit the program.
Fortunately, the Trump Administration has offered a proposal to actually improve matters for consumers.
Under the administration’s proposal, the 340B program would require hospitals to file claims with drug manufacturers for rebates, rather than the current process of granting those hospitals up-front drug price discounts. With that change, the program would create a paper trail to prevent hospitals from exploiting the discounts in the shadows.
There have been similar successful real-world reforms enacted in other federal drug pricing programs such as the Medicaid Drug Rebate Program of 1990 and the Department of Veterans Affairs Federal Supply Schedule. Each of those reforms created a more transparent paper trail that enhanced program efficiency in the way that the Trump Administration’s 340B program reform idea proposes.
Simply put, the 340B program, however well-intentioned, has proved to be a prescription for disaster. In practice, its murky logistics has ended up benefiting participating providers at the expense of patients and increased healthcare costs.
Accordingly, as Congress continues its effort to reduce healthcare costs, it should focus on where reform and savings constitute low-hanging fruit: the 340B program and the way it has to date served the interests of participating hospitals rather than patients.
Timothy H. Lee is Senior Vice President of legal and public affairs at the Center for Individual Freedom.
Reprinted with Permission from CFIF.org – By Timothy H. Lee
The opinions expressed by columnists are their own and do not necessarily represent the views of AMAC or AMAC Action.
