Hospitals Are Gaming 340B.

Americans Are Paying the Price.

A federal safety-net initiative designed to protect vulnerable patients has morphed into an $80+ billion hospital markup program riddled with waste, abuse, and little to no transparency. Now, efforts to bring basic oversight are under attack.

It is time to hold hospitals accountable and restore 340B to its original role as a safety net.

How 340B Went Off Track

The Original Mission

Congress created the 340B program in 1992 to help vulnerable patients access affordable medicines. The program requires drug manufacturers to provide steep discounts to eligible safety-net hospitals and clinics. These “covered entities” were supposed to use those savings to expand care for low-income and uninsured patients.

The Missing Safeguards

The 340B statute did not include explicit mandates requiring hospitals to pass those discounts directly to the patients. Hospitals exploited this legislative loophole to pocket the “spread” between the discounted price they pay and the price they bill.

The Profit Motive

340B hospitals have a financial incentive to maximize revenue rather than patient benefit. Today, many hospitals purchase medicines for pennies on the dollar and bill patients and insurers at a massive premium — with markups in some cases exceeding 1,000%.

Expansion Beyond the Safety Net

Driven by these profits, the program has exploded. 340B drug purchases now top $80 billion annually. Thousands of participating hospitals, and their sprawling pharmacy networks, have expanded into high-income neighborhoods — moving far beyond the vulnerable communities the program was built to serve.

Accountability That Never Kept Up

The program was permitted to grow unchecked in the absence of robust oversight. Only a small fraction of participants are ever audited, even as 340B hospitals continue to provide low levels of charity care amidst ever-increasing revenue.

The Bottom Line

We now have a hospital markup program where billions of dollars flow with effectively no transparency — and no clear evidence that the patients who need help the most are actually seeing the benefit. This accountability gap burdens families with higher premiums and out-of-pocket costs, while driving up spending for taxpayer-funded programs like Medicaid and Medicare.

A Common-Sense Transparency Reform

The Trump administration has taken an important first step in tackling healthcare fraud, waste, and abuse: The 340B rebate model pilot.

The rebate model pilot introduces accountability by tying program discounts to verified, eligible use. Under this approach:

Hospitals and clinics would submit claims-level data to confirm eligibility

Discounts would be delivered as rebates — issued only after verification that the prescription was eligible for 340B, rather than provided upfront

Policymakers and the public would gain real visibility into how an $80+ billion program is being utilized

This is not a cut or a rollback. It is a common-sense transparency reform designed to restore integrity to a program that has long operated without it.

Why Reform Matters

Without reform, the very patients the 340B program was designed to support will continue to be left behind — while large hospitals and for-profit pharmacies reap the financial benefits. As it stands, the program incentivizes the wrong behaviors.

Patients still face high out-of-pocket costs at the pharmacy, even when hospitals acquire their medications at deeply discounted prices
Employers and working families shoulder rising healthcare costs as 340B-driven markups inflate overall spending
Taxpayers absorb mounting inefficiencies and overpay for medicines, with billions in lost revenue and little evidence of meaningful patient benefit

340B should function as a true safety net — not as a revenue stream for hospitals and middlemen.

Who Is Blocking Reform — and Why

The Trump administration’s rebate model pilot is facing organized opposition from hospital lobbying groups and their allies in Congress. Dozens of lawmakers are now pushing to block funding for the pilot.

Why the resistance? Because the current system is enormously profitable. Under the status quo, hospitals and their pharmacy partners can:

Transparency will bring new scrutiny to this program — and hospital lobbyists know it. When hospitals fight the rebate model pilot in court and work to kill it in Congress before it is even implemented, they are not protecting patients. They are protecting a revenue stream. Lawmakers should not do their bidding.

Let the Hospital Transparency Reform Move Forward

The Trump administration’s 340B rebate model pilot is America First policy in action. It is a long overdue first step towards tackling waste, rooting out fraud, and demanding accountability from institutions that benefit from federal safety-net programs.

Congress should not stand in the way. It should let the hospital transparency reform move forward without interference.