The federal 340B Drug Pricing Program was created in 1992 with a straightforward mission: help safety-net hospitals and clinics stretch limited resources to serve low-income and uninsured patients. Three decades later, that mission has been quietly buried under an avalanche of bureaucratic red tape and profiteering.
The program has seen meteoric growth even over the last few years, up from $44 billion in 2021 to $81 billion in 2024. What was designed as a targeted safety-net subsidy has become a mechanism that drives up healthcare costs for the government, employers, and taxpayers, while vulnerable patients seldom see the benefits.
The problems are well-documented. The program lacks a clear definition for a qualified patient, meaningful oversight, or any requirement that hospitals pass savings along to the patients it was designed to serve. Poor supervision has enabled 340B hospitals—including large conglomerates that have absorbed qualified hospitals—and contracted pharmacies to exploit the program and generate millions of dollars in profit. Patients aren’t seeing the benefits, while taxpayers and consumers are pay the ever-increasing price.
Now, the Centers for Medicare and Medicaid Services is trying to get a basic handle on what’s happening inside the program.
In 2026, CMS conducted a survey of hospitals’ drug acquisition costs, laying the groundwork to reduce Medicare payments for drugs acquired under the 340B program. Their 2027 Out-patient Prospective Payment System (“OPPS”) proposed rule seeks to do just that by adjusting payments to better align with what these 340B entities pay for drugs. Such transparency is the first step in bringing some long-overdue accountability to how those discounts are being used, while at the same time freeing up more resources for small, rural hospitals.
Many would agree that this is entirely reasonable. Except the hospitals benefiting most from the 340B program as it stands don’t want to cooperate. In fact, they complied with the acquisition cost survey at only half the rate of non-340B hospitals, conveniently leaving CMS, “with a sample size too low to draw legally tenable conclusions,” according to lawyers for the hospital systems.
This is not a principled policy stance, despite what many of them want you to think. If a hospital system is resisting transparency, taxpayers, patients, and lawmakers are right to wonder what they are hiding.
Transparency is the bare minimum the public should expect from institutions receiving billions in government-mandated drug discounts. Until 340B hospitals are willing to show their work, taxpayers have every reason to assume the worst about where that money is actually going. In the immediate term, the administration should finalize its 2027 OPPS rule and bring some much-needed accountability to this program.