Large, tax-exempt hospitals are exploiting a little-known federal program for profit and driving up health care costs for everyone.
The 340B program was created to help vulnerable patients access more affordable medicines. But today, big hospitals use it as a profit engine—buying drugs at steep discounts, marking them up by as much as 1,000% or more and billing patients and insurers at full price. Hospitals pocket the difference with zero requirement to help patients.
If the money isn’t benefiting patients, then where is it going?
Patients are left behind while hospital profits skyrocket.
340B abuse siphons funds from businesses and employers.
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The 340B price premium translates to approximately $36 billion a year in extra hospital spending by employers.
340B growth was associated with approximately $23 billion in additional employer-based health care expenses in 2023.
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Unchecked growth of the 340B program led to $7.8 billion in increased health care costs for self-insured and fully insured employers and workers from lost rebates in 2021.
340B abuse diverts resources from the government that could be invested in local communities.
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Federal and state governments lost $1.8 billion in tax revenue in 2021 due to lost rebates.
340B reduced federal and state tax revenue by nearly $17 billion in 2023.
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340B costs state and federal taxpayers an estimated $6.5 billion in 2024 due to lost Medicaid rebates.
The 340B program has become a hidden tax on patients, employers and taxpayers. The Congressional Budget Office has even confirmed that 340B encourages behaviors that increase federal spending by incentivizing providers to prescribe more and higher-cost drugs. Hospitals are maximizing profits while families and communities bear higher costs.
