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340B Drug Pricing Program

The 340B Drug Pricing Program is a U.S. federal initiative established in 1992 under Section 340B of the Public Health Service Act, requiring pharmaceutical manufacturers that participate in Medicaid to sell outpatient drugs to eligible "covered entities"—primarily safety-net providers such as disproportionate-share hospitals, federally qualified health centers, and Ryan White HIV/AIDS clinics—at steeply discounted ceiling prices calculated as the average manufacturer price minus the Medicaid unit rebate amount (typically yielding at least a 23.1% reduction off average sales price for most drugs).^[1]^[2]^[3] The program's core mechanism ties manufacturer discounts to Medicaid participation, aiming to extend federal resources for underserved populations by allowing covered entities to purchase drugs below market rates and redirect savings toward expanded patient services, though entities must comply with prohibitions on reselling to ineligible patients (diversion) or claiming duplicate Medicaid rebates.^[4]^[5] Eligible entities, numbering over 3,000 hospitals and 12,000 clinics as of recent data, may dispense drugs directly or via contract pharmacies, a flexibility that has fueled program expansion but also raised integrity concerns.^[6]^[7] Since inception, the program has experienced explosive growth, with covered entity purchases surging from $6.6 billion in 2010 to $66.3 billion in 2023—a compound annual growth rate exceeding 19%—driven by increased hospital participation, contract pharmacy arrangements, and higher drug utilization rather than solely inflation or volume in safety-net care.^[8]^[9]^[10] This scale has generated substantial revenue for participants, estimated at tens of billions annually in savings, yet empirical analyses reveal mixed outcomes: while some studies link 340B participation to service expansions like free clinics, others find limited pass-through benefits to low-income or uninsured patients, with savings often funding facility upgrades, debt reduction, or administrative costs instead.^[11]^[12] Controversies center on program oversight deficiencies, including opaque pricing data, unchecked contract pharmacy proliferation (from hundreds to over 30,000 sites), and allegations of systemic abuse where hospitals capture "spread pricing" profits from third-party payers without commensurate patient aid, prompting manufacturer restrictions, federal audits, and litigation.^[13]^[14]^[15] Peer-reviewed scoping reviews confirm causal ambiguities in patient access gains versus revenue capture, with hospital operating margins rising post-enrollment but disproportionate benefits accruing to larger, less indigent facilities—underscoring tensions between original intent and evolved incentives amid absent statutory requirements for savings tracking.^[16]^[11]^[17]

History

Creation in 1992

The 340B Drug Pricing Program was enacted as Section 340B of the Public Health Service Act through Section 602 of the Veterans Health Care Act of 1992 (Public Law 102-585), signed into law by President George H. W. Bush on November 4, 1992.^[18]^[19] This legislation required manufacturers of covered outpatient drugs participating in Medicaid to enter into pharmaceutical pricing agreements with the Secretary of Health and Human Services, limiting prices charged to eligible covered entities.^[20] Building on the Medicaid Drug Rebate Program established by the Omnibus Budget Reconciliation Act of 1990, the 340B provision sought to counter escalating prescription drug costs threatening safety-net providers amid federal budget constraints and Medicaid adjustments.^[21] The ceiling price mechanism was defined as the average manufacturer price (AMP) for the quarter minus the unit rebate amount (URA), with the URA comprising a basic rebate of 15.1 percent of AMP plus an inflation component, yielding effective discounts often between 20 and 50 percent on brand-name drugs.^[22]^[23] Initial covered entities were limited to safety-net organizations serving vulnerable populations, including disproportionate share hospitals (DSH) qualifying for Medicaid supplemental payments due to high volumes of low-income patients, federally qualified health centers, and specialized clinics such as hemophilia treatment centers, Title X family planning grantees, Native Hawaiian health centers, and Ryan White AIDS program recipients.^[20]^[14] The program's core intent focused on enabling these entities to stretch scarce federal resources to sustain or expand care for uninsured and indigent patients, without requiring direct pass-through of savings to individuals.

Early Implementation and Initial Expansions

The Health Resources and Services Administration (HRSA) initiated administrative oversight of the 340B program in 1994 through its Office of Pharmacy Affairs, issuing foundational guidance on covered entity registration, compliance obligations, and eligibility criteria for outpatient facilities. This rollout emphasized strict adherence to statutory prohibitions, such as duplicate discounts and diversion of drugs to ineligible patients, to ensure discounts supported safety-net providers serving vulnerable populations.^[24] Initial participation remained modest, with approximately 8,100 registered sites by 2000, reflecting the program's limited scope focused on disproportionate share hospitals and select federal grantees rather than widespread utilization.^[14] Key early modifications expanded operational flexibility without altering core eligibility. In 1996, HRSA guidance permitted covered entities lacking in-house pharmacies to contract with a single external pharmacy, enabling broader distribution of discounted drugs while maintaining safeguards against abuse.^[25] This addressed logistical barriers for entities like certain federally qualified health centers (FQHCs) and Ryan White HIV/AIDS program clinics, which were among the federal grantees eligible from the program's inception but faced practical implementation hurdles.^[12] By 2003, further clarifications reinforced inclusion of specialized grantees, such as hemophilia treatment centers and Title X family planning projects, aligning with the statutory aim of leveraging discounts to stretch scarce federal resources for targeted care.^[26]^[27] Pre-2010 utilization data underscored the program's restrained growth, with purchases representing a fraction of later volumes and primarily benefiting core safety-net functions rather than generating substantial revenue surpluses.^[28] These foundational rules prioritized empirical compliance monitoring over expansive policy shifts, maintaining focus on enabling eligible entities to extend federal funding efficiency without incentivizing over-expansion.^[27]

Post-2010 Growth and Policy Shifts

Following the enactment of the Affordable Care Act (ACA) in 2010, the 340B program's scale expanded dramatically, with annual drug purchases by covered entities rising from $6.6 billion in 2010 to $66.3 billion in 2023.^[12]^[7] This surge reflects a compound annual growth rate exceeding 20%, outpacing overall U.S. prescription drug spending, and was facilitated by ACA provisions that broadened eligibility to include critical access hospitals, rural referral centers, sole community hospitals, and certain children's hospitals, thereby increasing the number of participating entities from approximately 2,000 in 2000 to over 3,000 by the mid-2010s.^[29]^[30] Key policy shifts under the ACA included the removal of prior statutory limits on contract pharmacy arrangements, enabling covered entities to dispense 340B-discounted drugs through unlimited external pharmacies rather than solely on-site facilities, which proliferated arrangements from fewer than 1,000 in 2004 to over 20,000 by 2023.^[31]^[32] Additionally, the ACA preserved Medicare inpatient payment rates that did not fully account for 340B discounts, allowing hospitals to retain the difference between discounted acquisition costs and higher reimbursements—creating a financial spread estimated at billions annually—while adjusting disproportionate share hospital (DSH) payments to incentivize efficiency but without mandating proportional increases in uncompensated care.^[8] These mechanisms, combined with hospital strategies such as acquiring outpatient clinics to qualify additional sites for 340B use, amplified program utilization without corresponding statutory requirements to reinvest savings directly into patient aid at scale.^[33] Empirical data indicate that this growth stems primarily from heightened drug volumes rather than price changes, with contract pharmacy expansion and clinic acquisitions accounting for much of the increase in eligible dispensing locations, often prioritizing revenue generation over the program's original intent to stretch federal resources for underserved patients.^[34] Lacking enforceable ties between discount volumes and charity care obligations, the incentives have causally favored maximization of 340B participation among financially stable entities, contributing to critiques that the program's expansion has decoupled discounts from direct safety-net benefits despite its statutory design.^[29]^[15]

Program Mechanics

Administration by HRSA

The Health Resources and Services Administration (HRSA), through its Office of Pharmacy Affairs (OPA), administers the 340B Drug Pricing Program by overseeing covered entity registration, verifying manufacturer compliance with discount obligations, calculating and publishing annual ceiling prices, and managing dispute resolution processes.^[1]^[35] Covered entities must register annually with OPA via the 340B OPAIS system, attesting to eligibility and designating authorized officials responsible for program compliance.^[36] Ceiling prices, which represent the maximum allowable discount, are computed quarterly as the average manufacturer price (AMP) from the prior quarter minus the Medicaid unit rebate amount (URA), adjusted for package size and rounded to two decimal places for publication, with manufacturers required to submit AMP and URA data to OPA for verification.^[23] HRSA facilitates aggregated purchasing via the 340B Prime Vendor Program (PVP), contracting with entities like Apexus to negotiate additional discounts, streamline distribution, and provide compliance education and tools to participants.^[37]^[1] Enforcement includes audits of both covered entities and manufacturers, which gained momentum after 2010 to address diversion (dispensing 340B drugs to ineligible patients), duplicate discounts (claiming both 340B and Medicaid rebates), and overcharges.^[38] In fiscal year 2024 audits of covered entities, HRSA identified diversion at contract pharmacies and required corrective action plans, including repayments; manufacturer audits in fiscal year 2025 confirmed overcharges by Cycle Pharmaceuticals Ltd. and Rhodes Pharmaceuticals LP, mandating refunds to affected entities.^[39]^[40] The Administrative Dispute Resolution (ADR) process, updated via final rule in April 2024, resolves claims of overcharges, diversion, or duplicate discounts through a panel issuing binding decisions, with claims required within three years of the alleged violation.^[41] However, GAO reports highlight HRSA's oversight limitations due to statutory constraints, including inadequate guidance and auditing for duplicate discounts in Medicaid managed care and insufficient verification of nongovernmental hospital eligibility, leading to recommendations for enhanced procedures that HRSA has partially implemented but struggles to enforce comprehensively.^[42]^[43] These gaps, evidenced by persistent noncompliance in audits, underscore administrative challenges in scaling oversight amid program growth.^[44]

Eligibility for Covered Entities

The 340B Drug Pricing Program limits eligibility for covered entities to statutorily defined categories of healthcare organizations, as outlined in 42 U.S.C. § 256b(a)(4), focusing on facilities serving disproportionate numbers of low-income or vulnerable patients.^[6] These include hospitals and non-hospital clinics that must maintain a Medicare provider agreement (or equivalent federal grant status), operate as public or nonprofit entities, and comply with annual registration and recertification through the Health Resources and Services Administration (HRSA).^[4] Disproportionate share hospitals (DSHs), the largest category of eligible hospitals, must qualify for Medicare's disproportionate share hospital payment adjustment under sections 1886(d)(5)(F) or 1886(s)(4)(D) of the Social Security Act.^[45] This requires a DSH patient percentage—calculated annually via Worksheet S-3 of Medicare Cost Report Form CMS-2552-10—exceeding statutory thresholds that reflect a minimum share of low-income patients, such as greater than 15% for most urban hospitals with 100 or more beds, but as low as 8% for certain small rural facilities under statutory "pick-up" policies.^[46]^[47] The percentage combines the hospital's Medicare SSI/dual-eligible patient day ratio with its Medicaid low-income patient utilization rate (excluding certain expansion populations), ensuring eligibility ties to empirical service of uninsured, Medicaid, or SSI patients; however, the formula's structure permits qualification by hospitals with relatively modest low-income volumes if SSI ratios suffice, enabling participation beyond core safety-net providers.^[48]^[15] Other hospital categories include critical access hospitals compliant with 42 U.S.C. § 256b(a)(4)(L)(i), freestanding children's hospitals (typically requiring a DSH adjustment percentage of at least 11.75%), and freestanding cancer hospitals meeting analogous criteria.^[49]^[50] Non-hospital entities eligible as covered entities comprise federally qualified health centers (FQHCs) funded under section 330 of the Public Health Service Act, sexually transmitted disease (STD) clinics receiving Title XXVI grants, HIV clinics under the Ryan White HIV/AIDS Program (Titles I-IV), and comprehensive hemophilia diagnostic and treatment centers designated by the Health Resources and Services Administration.^[6]^[51] As of 2025, HRSA registers approximately 2,800 hospitals—predominantly DSH facilities—and around 12,000 non-hospital clinics as covered entities, reflecting program growth driven by statutory expansions and inclusive DSH thresholds that incorporate diverse patient demographics, including hospitals where low-income shares meet minimums but do not dominate overall operations.^[1]^[13] Empirical data from Medicare cost reports confirm DSH-eligible hospitals serve elevated low-income patient volumes (median DSH percentages often exceeding 20-30%), yet analyses highlight how technical compliance with 8-11% thresholds allows non-traditional participants, potentially diluting the program's safety-net focus without violating eligibility rules.^[15]^[45]

Discount Mechanism and DSH Adjustment

The 340B ceiling price for a covered outpatient drug is determined by subtracting the unit rebate amount (URA) under the Medicaid Drug Rebate Program from the average manufacturer price (AMP) reported for the preceding calendar quarter, using the smallest unit of measure for the national drug code.^[52] This statutory formula mandates discounts without negotiation or opt-out for manufacturers participating in Medicaid coverage of outpatient drugs, with the URA reflecting a minimum rebate of 23.1% of AMP plus additional inflation-based adjustments, often resulting in effective discounts of 23% to 50% relative to standard pricing benchmarks.^[51]^[14] The fixed, non-negotiated nature of this mechanism ties 340B pricing directly to Medicaid rebate computations, creating a predictable but variable discount depth based on each drug's AMP and rebate liability. Eligibility for disproportionate share hospitals (DSH) under 340B hinges on receiving a Medicare DSH adjustment payment, which requires a DSH patient percentage—calculated from the proportion of inpatient days attributable to Medicaid and low-income Medicare beneficiaries (via Supplemental Security Income proxy)—exceeding thresholds that yield an adjustment factor greater than 11.75%.^[53]^[45] This metric aims to identify safety-net providers serving high volumes of uncompensated care but does not impose ongoing audits linking discount purchases to specific uncompensated care utilization or patient outcomes.^[54] Consequently, once certified as eligible, hospitals can acquire drugs at ceiling prices for dispensation to insured patients without proportional safeguards ensuring the discount benefits offset uncompensated costs directly. The discount structure inherently generates an arbitrage spread, as covered entities acquire drugs below ceiling prices (due to HRSA's penny-down policy for overcharges) and reimburse at higher acquired acquisition costs or negotiated rates when billing payers like Medicare Part B or commercial insurers, retaining the differential as institutional revenue.^[55]^[15] Program rules prohibit duplicate discounts—such as claiming Medicaid rebates on the same units—but impose no requirement to reduce patient charges or demonstrate passthrough of savings to uninsured individuals, permitting entities to leverage the spread for general operations, facility expansions, or executive compensation without direct traceability to charity care. This detachment between eligibility criteria and discount application fosters revenue generation exceeding $40 billion in annual purchases by 2021, with empirical analyses indicating that much of the retained spread accrues to participating providers rather than mandated patient subsidies.^[15]^[56]

Covered Drugs and Exclusions

The 340B Drug Pricing Program applies to covered outpatient drugs, defined under section 1927(k)(2) of the Social Security Act as prescription drugs (excluding those for inpatient use) for which manufacturers have entered into a Medicaid drug rebate agreement with the Secretary of Health and Human Services.^[20] These encompass a broad range of outpatient prescription medications dispensed or administered outside inpatient hospital settings, including those used in clinics, discharge prescriptions qualifying as outpatient, and certain other ambulatory contexts.^[57] Manufacturers participating in Medicaid are statutorily required to offer 340B ceiling prices—calculated as the average manufacturer price minus a specified rebate percentage—on all such covered drugs to every eligible covered entity, without discrimination or additional restrictions beyond program compliance.^[20] Key exclusions limit the program's scope to outpatient prescription pharmaceuticals. Inpatient-administered drugs, such as those provided during hospital stays under Medicare Part A, are ineligible, as the statute explicitly ties coverage to outpatient utilization.^[57] Medical devices, biological products without a drug rebate agreement, and vaccines are also excluded, as they do not qualify as covered outpatient drugs under the Medicaid definition.^[14] Over-the-counter drugs are generally ineligible unless specifically covered under a state's Medicaid plan and subject to rebate calculations treating them as prescription equivalents, though such cases are rare and not standard in 340B purchasing.^[20] Orphan drugs, designated by the FDA under the Orphan Drug Act for treating rare diseases or conditions affecting fewer than 200,000 U.S. patients, present a partial exclusion implemented via the Patient Protection and Affordable Care Act amendments effective January 1, 2010. For pre-expansion covered entities (e.g., disproportionate share hospitals), orphan drugs remain eligible as covered outpatient drugs regardless of indication.^[58] However, for newly eligible entities—including children's hospitals, freestanding cancer hospitals, critical access hospitals, and certain rural facilities—orphan drugs are statutorily excluded from 340B discounts to curb potential overuse of high-cost therapies in non-rare populations.^[59] This carve-out reflects congressional intent to balance program expansion with safeguards against disproportionate discounting, though orphan drugs used for non-orphan indications may still qualify where the exclusion does not apply.^[58]

Operational Features

Patient Definition and Eligibility

The 340B Drug Pricing Program's statutory language, under Section 340B(a)(5)(A) of the Public Health Service Act, restricts the use of discounted drugs to "patients" of covered entities without providing a precise definition of the term, leaving interpretive latitude to the Health Resources and Services Administration (HRSA). This omission enables covered entities—such as disproportionate share hospitals and federally qualified health centers—to apply discounts to outpatient drugs dispensed to individuals receiving services from the entity, including those referred by external providers, as long as the entity delivers a qualifying medical or professional service that generates a prescription.^[5] In practice, this encompasses inpatients, outpatients, and individuals obtaining drugs via contract pharmacies tied to the entity, without mandating that the patient initiate care directly with the covered entity.^[24] HRSA's seminal 1996 guidance formalized a two-pronged test for patient eligibility: the individual must receive a professional service from the covered entity, such as a medical consultation or evaluation, and a prescription for a covered outpatient drug must arise from that interaction or associated treatment regimen.^[60] Notably, this framework imposes no requirement for income verification, citizenship status, or documentation of financial need, permitting discounts to extend to insured patients, including those with commercial coverage or higher socioeconomic status, provided they meet the service nexus.^[57] Such breadth aligns with the program's aim to stretch resources for safety-net providers but introduces causal risks of dilution, as discounts intended to aid vulnerable populations may subsidize care for less indigent individuals through revenue generated from markups on 340B drugs charged to payers.^[13] Interpretive ambiguities persist, particularly around the scope of "professional services," which courts have construed expansively to include scenarios where patients are referred externally for prescriptions fulfilled by the covered entity, without necessitating comprehensive ongoing care coordination by the entity itself.^[61] HRSA's 2015 omnibus guidance attempted to narrow this by limiting eligibility to patients whose presenting condition prompted the prescription, excluding incidental services like flu shots, but federal courts invalidated these restrictions in 2023, reverting to the more permissive 1996 standard amid ongoing litigation.^[24] ^[62] As of 2025, HRSA has issued compliance resources, including updated patient definition guidelines in January 2024, emphasizing audit reviews for diversion and eligibility but stopping short of imposing stricter federal mandates or means-testing protocols.^[5] This lack of rigorous criteria continues to facilitate broad application, potentially undermining the program's original safety-net focus by allowing discounts to flow beyond empirically needy patients without verifiable safeguards.^[63]

Contract Pharmacy Arrangements

Covered entities may designate external contract pharmacies to dispense 340B-eligible drugs to patients, allowing the entities to extend discounted drug access beyond their in-house facilities.^[13] Under this arrangement, the covered entity purchases the drugs at 340B ceiling prices from manufacturers or wholesalers and reimburses the contract pharmacy for dispensing services, retaining the discount as a financial offset.^[11] This mechanism enables covered entities without on-site pharmacies, particularly in rural areas, to participate in the program by partnering with community or chain pharmacies.^[64] The number of contract pharmacies participating in 340B arrangements grew rapidly, from approximately 1,000 in 2010 to nearly 28,000 by 2021.^[11] By 2022, the total arrangements exceeded 100,000, reflecting a compound annual growth rate exceeding 20% in relationships between covered entities and pharmacies.^[65] ^[32] Proponents argue this expansion enhances patient access in underserved and rural regions, where over 80% of 340B-eligible rural hospitals rely on contract pharmacies to provide outpatient medications locally.^[64] ^[66] However, contract pharmacy claims constituted a substantial share of 340B activity by the early 2020s, with arrangements generating an estimated $5 billion in profits for covered entities from such sales in 2019 alone.^[67] In response to this growth, several manufacturers imposed restrictions on contract pharmacy access starting in 2020, limiting 340B pricing to designated single pharmacies or requiring use of third-party administrators (TPAs) for claim verification.^[68] For instance, Johnson & Johnson mandated TPA involvement for hospital contract pharmacy claims effective in 2021, becoming the 16th manufacturer to enact such measures.^[69] Takeda similarly tightened restrictions, contributing to a pattern where at least 21 drugmakers by mid-2023 constrained dispensing at non-verified sites.^[70] To address these challenges and explore alternatives to upfront discounts, the Health Resources and Services Administration (HRSA) launched a 340B Rebate Model Pilot Program in 2025, shifting select transactions to retrospective rebates for approved manufacturers and drugs, with implementation beginning January 1, 2026.^[71] ^[72] This pilot applies to limited Medicare Part B purchases via contract pharmacies, aiming to enhance compliance verification while maintaining discount delivery.^[1]

Duplicate Discount Safeguards

The 340B statute explicitly prohibits covered entities from obtaining a discounted price under the program for outpatient drugs dispensed to Medicaid beneficiaries if a Medicaid drug rebate is also claimed for the same unit, thereby shielding manufacturers from providing duplicate discounts on identical prescriptions.^[73] This restriction, codified in 42 U.S.C. § 256b(a)(5)(A)(i), ensures that federal savings mechanisms do not overlap, as manufacturers would otherwise incur double price concessions—once via the 340B ceiling price and again through Medicaid rebates calculated as a percentage of average manufacturer price.^[74] Violations occur when entities fail to exclude Medicaid-reimbursed units from 340B purchasing, often due to inadequate tracking of patient eligibility or managed care claims. HRSA enforces the duplicate discount safeguard primarily through retrospective data matching, comparing 340B purchase records submitted by covered entities and manufacturers against Medicaid rebate claims processed by the Centers for Medicare & Medicaid Services (CMS).^[44] Under this process, HRSA identifies potential duplicates and notifies entities for corrective action, with penalties including repayment demands, civil monetary fines up to $5,000 per instance, and potential program exclusion for willful violations.^[38] However, enforcement relies on self-reported data and lacks real-time verification, creating gaps particularly in Medicaid managed care organizations (MCOs), where rebate tracking is fragmented across states and plans. Government Accountability Office (GAO) assessments from 2018 to 2020 highlighted systemic oversight deficiencies, including HRSA's failure to routinely audit for duplicates in MCO settings and inconsistent state-level policies for preventing overlaps, which contributed to undetected violations in thousands of audited claims between fiscal years 2012 and 2019.^[75] ^[44] For instance, HRSA audits uncovered 1,536 total program violations during this period, with duplicate discounts comprising a notable subset, though exact quantification remains elusive due to incomplete data submission by entities.^[76] These lapses reflect incentive structures where covered entities retain 340B savings as profit margins—potentially exceeding audit detection risks—while manufacturers bear the financial burden of rebate overpayments estimated in analyses to affect 3 to 5 percent of intersecting 340B and Medicaid drug units.^[13] Despite audit improvements, such as increased focus on contract pharmacies post-2018, duplicate discount findings persisted into the early 2020s, with GAO recommending enhanced data requirements and joint HHS-CMS protocols to address tracking failures.^[75] By fiscal year 2018, over 30 percent of audited 340B hospitals had at least one duplicate discount violation, though subsequent compliance rates rose amid heightened scrutiny.^[77] Ongoing challenges stem from the program's scale, with 340B purchases reaching $44 billion in 2021, amplifying the fiscal stakes of even low violation rates.^[16] Manufacturers have responded by restricting 340B sales in high-risk scenarios, underscoring persistent enforcement shortfalls.^[78]

Intended Benefits and Empirical Outcomes

Cost Savings for Safety-Net Providers

Covered entities in the 340B Drug Pricing Program, including safety-net providers such as disproportionate share hospitals (DSH) serving high proportions of uninsured patients, acquire outpatient drugs at statutory ceiling prices that reflect discounts typically ranging from 25% to 50% below average wholesale price, with an average of approximately 34% based on analyses of program data.^[79]^[3] This pricing enables entities to bill payers, including Medicare and commercial insurers, at rates often substantially exceeding the discounted acquisition cost, thereby retaining the resulting spread as revenue to support operations.^[15] In 2023, total purchases under the program reached $66.3 billion, a 23% increase from $53.7 billion in 2022, implying tens of billions in aggregate financial gains from these margins for participating safety-net providers.^[7]^[9]^[80] These retained spreads have provided measurable financial relief to DSH hospitals and other eligible entities facing chronic under-reimbursement for uninsured care, contributing to improved operating margins and enabling investments in core infrastructure amid serving patient populations with Medicaid and uninsured rates often exceeding 30%.^[11] For instance, program participation has been credited by safety-net administrators with averting facility closures or service cutbacks in rural and underserved areas, where pre-340B financial pressures threatened viability, as evidenced by hospital reports linking discount revenues to sustained operations.^[81] Such outcomes align with the program's statutory intent to "stretch scarce federal resources" by bolstering provider solvency without direct appropriations, allowing indirect support for patient care through preserved access points.^[1] However, scoping reviews of empirical outcomes indicate only associative, rather than strongly causal, ties between 340B-generated revenues and direct resource stretching for patient aid, with studies finding no significant post-participation increases in uncompensated care provision at DSH hospitals despite the influx of funds.^[11]^[82] This suggests that while financial gains enhance overall entity stability, the mechanism's effectiveness in proportionally directing savings toward the intended expansion of services for low-income patients remains limited by opaque allocation practices and varying reimbursement dynamics.^[83]

Expansion of Services and Charity Care

The 340B program's intent includes enabling safety-net providers to leverage drug discounts for stretching scarce resources, thereby facilitating expansions in services like charity care for vulnerable populations.^[13] However, the statute establishing the program contains no mandate requiring covered entities to allocate discount savings directly to charity care or uncompensated care, permitting flexibility in their application.^[84] Empirical evidence indicates limited proportional growth in charity care following 340B participation. One analysis of hospital financial data found that initiating 340B involvement correlated with a 28.9 percent increase in charity care spending but no significant change in overall uncompensated care levels.^[85] More recent examinations of Medicare cost reports show charity care at 340B hospitals trending downward in aggregate, with 25 percent of such hospitals accounting for 80 percent of total charity care in fiscal year 2021, highlighting concentration rather than broad expansion.^[86] For disproportionate share hospitals, charity care expenditures represented only 42 percent of 340B-generated profits on average, suggesting savings often support other operational priorities over proportional increases in uncompensated services.^[87] The absence of tied requirements has enabled hospitals to direct substantial 340B margins—derived in part from administering discounted drugs to privately insured or Medicare patients—toward revenue-generating activities, such as facility expansions or specialty service lines, rather than exclusively bolstering charity care proportions.^[88]^[89]

Evidence from Studies on Patient Access

A 2023 scoping review published in JAMA Health Forum analyzed 63 studies on the 340B program's outcomes and found associations with expanded health care services, including the establishment of specialty clinics for conditions such as cancer, diabetes, and stroke, as well as oncology clinic acquisitions by participating hospitals.^[67] These expansions were linked to improved patient access in some contexts, such as higher medication adherence rates (5-7% increases for patients with diabetes, hyperlipidemia, and hypertension at 340B-participating sites) and support for ancillary services like transportation assistance.^[67] However, the review highlighted uneven distribution, with post-2005 program entrants often serving higher-income areas rather than the low-uninsurance, low-income communities prioritized by earlier participants, and contract pharmacies disproportionately located in affluent neighborhoods.^[67] Empirical evidence from federally qualified health centers (FQHCs), which constitute a significant portion of 340B covered entities, indicates sustained service maintenance and expansions in rural and underserved areas, with surveys reporting that 92% of responding FQHCs used 340B savings to preserve or grow access for low-income and rural patients through extended clinic hours or additional sites.^[90] Specific cases, such as hemophilia treatment centers, demonstrate use of program revenue for staff salaries and patient transportation to enhance treatment adherence.^[67] Nonetheless, broader national analyses reveal mixed results on direct access gains for low-income populations, with some studies documenting a 29% rise in charity care at 340B hospitals while others find no overall increase in uncompensated care or mortality reductions attributable to the program.^[67] While these expansions represent indirect benefits via revenue reinvestment, causal assessments question their universality and proportionality to program costs, as evidence suggests diluted focus on the poorest patients and potential shifts in care delivery that do not consistently translate to net access improvements outweighing systemic expenditures.^[67]^[91] For instance, oncology service growth has occurred alongside site-of-care shifts to higher-cost hospital settings, limiting verifiable broad-based access enhancements for underserved groups.^[92]

Criticisms and Unintended Consequences

Profit Maximization Over Patient Benefits

Participating hospitals in the 340B program purchase outpatient drugs at mandatory discounts from manufacturers, averaging 25% off average sales price, then bill Medicare and private insurers at full acquisition cost or higher, retaining the difference as revenue known as the "spread."^[93]^[94] For instance, a hospital might acquire a cancer drug for $75,000 under 340B pricing and reimburse Medicare at $200,000, yielding a $125,000 spread per dose.^[94] The program's structure imposes no requirement for covered entities to pass these savings directly to patients or limit their use to indigent care, enabling retention for institutional priorities.^[15] This retention has correlated with substantial growth in executive compensation at 340B-eligible non-profit hospitals. A 2024 analysis of 38 such hospitals found average executive pay increases of 206% following 340B eligibility, with compensation as a share of revenue rising 38% on average; extreme cases included Yale New Haven Hospital (1,421% increase) and Bon Secours St. Mary's Hospital (782% increase).^[95] Critics, including advocacy groups, contend that 340B-generated spreads contribute to these elevated packages, diverting funds from direct patient benefits amid stagnant charity care levels in many facilities.^[96] Empirical patterns show non-profit hospitals leveraging 340B revenue to prioritize high-margin services and expansions, such as acquiring outpatient facilities that boost eligibility and drug dispensing volume.^[93] Post-merger, 340B-participating hospitals exhibit profit margins 5.2% to 7.0% higher than non-participants, incentivizing consolidation to amplify spreads without corresponding mandates for patient relief.^[97] The absence of pass-through requirements causally drives this shift, as entities maximize revenue retention over direct discounts to patients, fostering for-profit-like behaviors in tax-exempt organizations.^[15] Proponents, such as the American Hospital Association, argue that retained 340B funds indirectly benefit patients by subsidizing uncompensated care and operational expansions, generating $100 billion in community value in 2022 alone.^[98] In contrast, critics including PhRMA and employer groups highlight the program's distortion toward profit maximization, where non-profits exhibit commercial incentives—charging full prices to insured patients while pocketing discounts—undermining its safety-net intent without evidence of proportional patient savings.^[99]^[15]

Lack of Transparency and Oversight

Covered entities participating in the 340B Drug Pricing Program are not subject to federal requirements mandating reports on their purchases, dispensing practices, or allocation of savings from discounted drugs.^[13]^[100] This gap in reporting contrasts with programs like Medicaid, which require detailed tracking of manufacturer discounts to avoid duplicates, leaving 340B operations without systematic federal visibility into how discounts benefit intended patients.^[43] The Health Resources and Services Administration (HRSA), which administers the program, conducts approximately 200 audits per year, encompassing a limited sample of the roughly 3,400 covered entities and thousands of associated sites.^[38]^[51] These audits have documented noncompliance, including diversion of 340B drugs to ineligible patients, with fiscal year 2025 results identifying specific instances requiring repayment and corrective action plans.^[101] Historical data from 2012 to 2016 audits showed noncompliance rates exceeding 50% in some years for violations such as diversion and duplicate discounts.^[11] The U.S. Government Accountability Office (GAO) has highlighted persistent oversight deficiencies since September 2011, recommending improved monitoring, data systems, and compliance verification to address risks of program abuse.^[102] Covered entities maintain that enhanced reporting would create excessive administrative burdens, straining resources needed for care delivery, while manufacturers, including through the Pharmaceutical Research and Manufacturers of America, call for Medicaid-like tracking to ensure discounts reach eligible patients and prevent misuse.^[103]^[104]

Diversion of Discounts and Markups

The 340B program's lack of explicit statutory requirements for patient income verification or restriction to uninsured individuals enables covered entities to dispense discounted drugs to commercially insured patients, diverting benefits away from the intended safety-net population. This diversion arises because entities may purchase drugs at steeply reduced prices—often 25% to 50% below wholesale—and resell them at standard rates to any outpatient, capturing the spread as revenue without mandates to pass savings directly to low-income recipients. Empirical analyses indicate that such practices generate substantial hospital profits, with one scoping review concluding that 340B participation yields financial windfalls primarily to providers rather than targeted patient benefits.^[83] A 2012 investigative series by The Charlotte Observer and The News & Observer examined North Carolina's nonprofit hospitals, many of which participate in 340B, finding they amassed high profit margins amid the Great Recession—sometimes exceeding 10% of revenues—while charity care levels remained stagnant or declined relative to overall patient volumes, implying that program savings were not reinvested in uncompensated care as intended. This loose patient definition causally facilitates diversion, as entities face no federal tracking of drug end-use beyond basic claims diversion safeguards, allowing flexibility that critics describe as program abuse.^[105]^[106] Resulting markups exacerbate costs for payers: 340B hospitals often bill insurers at rates 4.9 to 10 times or more above acquisition costs for high-volume drugs like oncology therapies, transferring inflated expenses to commercial plans and contributing to premium hikes estimated in the billions annually for employers and patients. Critics, including pharmaceutical manufacturers, contend this dynamic harms payers by subsidizing hospital revenues at the expense of broader affordability, with one analysis attributing nearly $65 billion in added drug spending to such markups. Proponents counter that these revenues help offset uncompensated care burdens, yet multiple studies find no causal association between 340B participation and increased charity care or community benefits, undermining the offset rationale.^[107]^[108]^[109]^[83]^[110]

Broader Market Distortions and Cost Inflation

The 340B program's mandatory discounts compel manufacturers to provide outpatient drugs at prices at least 23.1% below average manufacturer price, creating incentives to raise list prices—such as wholesale acquisition costs (WAC)—to preserve revenues from non-340B sales.^[111] Analyses project that expanded 340B penetration exacerbates this dynamic, as manufacturers offset deepening revenue erosion by further elevating benchmark prices that influence payer negotiations and reimbursement formulas.^[112] The Congressional Budget Office (CBO) attributes part of the program's rapid expansion—from $6.6 billion in drug purchases in 2010 to $43.9 billion in 2021—to these distortions, noting that covered entities respond by shifting toward higher-cost drugs to maximize discount spreads.^[12]^[8] Empirical data link 340B growth to accelerated cost inflation in specialty pharmaceuticals, where annual WAC increases averaged 14% from 2007 to 2016, outpacing the 6% rise in 340B acquisition prices for the same classes.^[113] This disparity amplifies burdens on commercial payers, as hospitals resell 340B drugs at full market rates, embedding markups into claims that elevate employer-sponsored insurance premiums by an estimated 4.2%, equivalent to $5.2 billion in added annual drug costs.^[114] Broader studies quantify the ripple effect at roughly $36 billion yearly in excess hospital expenditures shifted to employers, driven by the program's facilitation of untracked profit margins rather than pass-through savings.^[115] These market distortions extend to innovation incentives, as 340B discounts erode manufacturer revenues—potentially by $3.3 billion to $4.9 billion annually under moderate expansion scenarios—diverting funds from research and development toward compensatory pricing strategies.^[116] CBO assessments underscore a causal misalignment: government-mandated pricing favors intermediary entities like disproportionate-share hospitals, which captured over 90% of 340B growth from 2010 to 2021, over direct efficiency gains for payers or end-users, perpetuating a cycle where federal savings claims mask upstream inflation.^[117]^[118]

Reports and Analyses

Government Reports and Audits

The Government Accountability Office (GAO) has conducted multiple audits of the 340B Drug Pricing Program since 2011, consistently identifying benefits from manufacturer discounts alongside significant oversight deficiencies administered by the Health Resources and Services Administration (HRSA). In its September 2011 report, GAO found that covered entities generated substantial revenue from 340B discounts—averaging 45 percent margins on certain drugs—and used these savings to expand services, such as increasing charity care by 20 to 30 percent at some facilities, but noted HRSA's reliance on self-reporting without routine site visits or data validation, leading to risks of diversion and duplicate discounts.^[102] Subsequent reports reinforced these issues; for instance, a June 2018 analysis of 55 covered entities revealed that while 30 provided discounts to low-income patients via contract pharmacies, HRSA lacked mechanisms to verify compliance at these sites, prompting recommendations for enhanced monitoring.^[75] HRSA's own manufacturer audits, mandated under the program's statute, have uncovered overcharges and noncompliance, resulting in recoupments though specific dollar amounts vary by case. In fiscal year 2025, HRSA audits of Cycle Pharmaceuticals Ltd. and Rhodes Pharmaceuticals LP determined overcharges to covered entities, ordering repayments and corrective actions to prevent future violations.^[40] An analysis of HRSA data from 2018 to 2022 showed violations in 60 percent of manufacturer audits, contrasting with higher compliance rates among audited hospitals, highlighting uneven enforcement.^[119] GAO's 2020 review of HRSA's compliance tools, including the 340B OPA Information System, criticized limited use of audits and investigations—only 20 entity audits completed from 2010 to 2019—despite evidence of program growth exacerbating risks.^[120] The Congressional Budget Office (CBO) examined 340B spending trends in a September 2025 report, documenting explosive growth from $6.6 billion in drug purchases in 2010 to nearly $44 billion in 2021, with an average annual increase of 19 percent driven by factors including hospital acquisitions of off-site pharmacies and broader eligibility expansions.^[117] CBO attributed about one-third of this rise to overall prescription drug market growth, but the remainder to program-specific dynamics like increased contract pharmacy use, which amplified discounts without proportional evidence of patient access improvements, underscoring inefficiencies in resource allocation.^[8] Federal reports have also flagged oversight gaps at the state Medicaid level, where interactions with 340B risk duplicate discounts—prohibited under statute but occurring when states claim rebates on 340B-priced drugs dispensed to beneficiaries. A January 2020 GAO assessment found many states lacked systems to identify 340B claims, with HRSA and CMS providing insufficient guidance, potentially costing billions in improper payments; for example, limited data-sharing between pharmacies, pharmacy benefit managers, and agencies hindered detection.^[44] These gaps persist, as evidenced by ongoing challenges in preventing rebate diversions estimated at $6.5 billion from Medicaid in 2024 alone.^[121] Overall, while audits confirm discount benefits accrue to entities, persistent compliance lapses and monitoring shortfalls indicate structural inefficiencies outweighing intended safeguards.^[122]

Independent and Industry Studies

A 2011 RAND Corporation analysis of Medicare payment differentials for ambulatory surgical centers indicated that while 340B-eligible disproportionate share hospitals (DSH) serve a higher proportion of low-income patients, the program's discounts do not demonstrably correlate with proportionally increased charity care across all participants, with some facilities showing limited expansion in uncompensated services relative to revenues generated.^[123] Subsequent independent reviews, such as a 2023 scoping review in JAMA Health Forum, identified associations between 340B participation and hospital revenue growth alongside service expansions like medication access programs, but noted inconsistent evidence linking savings directly to patient benefits, particularly for uninsured populations.^[67] Advocacy groups aligned with safety-net providers, including 340B Health and the Safety Net Hospitals for Pharmaceutical Access (SNHPA), have commissioned or cited studies emphasizing the program's role in enhancing access; for instance, a 2021 comparative analysis found that 340B hospitals offered more comprehensive medication assistance services than non-340B peers of similar size, enabling broader outpatient treatments for vulnerable patients.^[124] These organizations argue that such outcomes justify the program's structure, countering criticisms by highlighting statutory requirements to reinvest savings in patient care, though empirical data on reinvestment transparency remains variable.^[70] Industry perspectives, particularly from the Pharmaceutical Research and Manufacturers of America (PhRMA), portray 340B as deviating from its safety-net intent toward hospital profit maximization, with reports estimating billions in markups that elevate costs for insured patients and taxpayers without commensurate charity care increases; PhRMA analyses claim these dynamics function as a "hidden tax," potentially harming access by inflating commercial drug prices.^[99] Similarly, the Community Oncology Alliance (COA) examined hospital price transparency data in 2022, revealing that 340B entities often charge oncology drugs at 4.9 times acquisition costs, generating margins that critics link to facility expansions rather than direct patient aid, exacerbating market distortions.^[107] A 2023 Marshall University study on 340B benefits and limitations quantified financial gains for participating entities but highlighted humanistic challenges, including uneven distribution of savings that fails to address access barriers in underserved regions, underscoring tensions between revenue generation and equitable outcomes.^[125] In 2025, the Global Coalition on Aging issued a policy brief acknowledging 340B's potential to support innovative care models for aging populations through discounted medications, yet critiquing current misalignments that prioritize institutional profits over targeted patient support, advocating reforms to realign incentives with health equity goals.^[126] Think tank analyses, such as those from the USC Schaeffer Center, reinforce these concerns by identifying misaligned incentives like spread pricing and patient eligibility loopholes, which independent modeling suggests contribute to over $40 billion in annual profits often unlinked to expanded charity care expectations.^[15]^[127]

Key Investigative Journalism and Congressional Probes

In April 2012, the Charlotte Observer published the investigative series "Prognosis: Profits," which examined how nonprofit hospitals in North Carolina, such as Duke University Hospital, utilized 340B discounts to acquire drugs at reduced prices—saving Duke $48.3 million on $65.8 million in purchases—while charging insurers and patients markups that generated additional profits exceeding $20 million annually, rather than directing savings toward charity care for the uninsured.^[128] The series revealed systemic practices where hospitals inflated chemotherapy drug prices amid market dominance, prioritizing revenue over intended patient benefits, prompting widespread scrutiny of 340B compliance and diversion.^[129] This reporting contributed to congressional attention, culminating in a March 24, 2015, hearing by the House Energy and Commerce Subcommittee on Health titled "Examining the 340B Drug Pricing Program," where witnesses testified on program growth, hospital profit margins, and inadequate safeguards against duplicate discounts and non-compliant dispensing, highlighting empirical evidence of windfalls not translating to expanded services for low-income patients.^[130] More recently, in March 2025, a Wall Street Journal investigation detailed escalating 340B abuses, including hospitals and pharmacy benefit managers exploiting contract pharmacy arrangements to amplify markups and revenues, with program spending surging despite limited transparency on how discounts reach patients, exacerbating cost inflation for non-340B payers.^[131] Concurrently, Senator Bill Cassidy's April 2025 Senate Health, Education, Labor, and Pensions Committee probe, involving document reviews and stakeholder interviews, confirmed persistent transparency gaps—such as unreported revenue allocations and oversight deficiencies—preventing verifiable links between discounts and patient access improvements, while documenting hospitals retaining millions in spreads without proportional charity care increases.^[132]^[133] Investigative coverage from 2023 to 2025 has also spotlighted patient impacts from manufacturer restrictions on specialty and contract pharmacies, implemented by 21 drugmakers as of June 2023 to curb perceived diversions; reports indicate these measures disrupted access for vulnerable patients at rural and safety-net providers, with some clinics facing delays in dispensing high-cost specialty drugs like those for cancer and hemophilia, though empirical audits underscore that such restrictions respond to verified contract pharmacy profit-sharing models lacking patient benefit mandates.^[70]^[64] Local exposés, such as a May 2025 Ohio Capital Journal probe into Cleveland Clinic's 340B subsidies ballooning to hundreds of millions amid declining uncompensated care, further evidenced selection for state-level audits based on media-flagged patterns of revenue retention over service expansion.^[134] These efforts collectively affirm a lack of robust data tracking discount usage, fueling bipartisan calls for enhanced auditing without resolving underlying compliance variances.^[135]

Legal and Legislative Developments

Major Lawsuits and Manufacturer Restrictions

Beginning in 2020, more than 20 pharmaceutical manufacturers imposed restrictions on providing 340B discounts to contract pharmacies affiliated with covered entities, citing concerns over duplicate discounts, diversion, and lack of oversight in the program's expansion.^[136] These measures often involved limiting the number of contract pharmacies per entity, requiring virtual verification portals (gateways) to confirm eligibility before dispensing, or ceasing shipments altogether to third-party pharmacies.^[137] For instance, Eli Lilly announced in July 2020 that it would limit 340B pricing for its erectile dysfunction drug Cialis to a single contract pharmacy per covered entity, while AstraZeneca informed entities in August 2020 that it would halt replenishments to contract pharmacies starting October 1.^[138] ^[139] By June 2023, additional firms like Novo Nordisk and Organon joined, tightening access for hospital-dispensed drugs at contract sites.^[140] These restrictions triggered federal litigation under the Administrative Procedure Act (APA), with manufacturers arguing that the 340B statute obligates discounts only for purchases made directly by covered entities—not unlimited distributions through contract pharmacies—and permits conditions to prevent statutory violations like duplicate discounts.^[136] In Eli Lilly and Company v. Department of Health and Human Services (filed January 2021), Lilly challenged HRSA guidance deeming such limits unlawful, after the agency threatened penalties including overcharge refunds and program exclusion; the suit contended HRSA exceeded its authority by mandating discounts to third-party administrators without statutory basis for unlimited access.^[141] ^[142] Covered entities countered that restrictions threaten patient access to discounted medications, potentially violating the statute's intent to stretch resources for underserved populations.^[143] Related disputes escalated over manufacturer-proposed "rebate models," where firms like Johnson & Johnson (J&J), Eli Lilly, Bristol Myers Squibb, and Novartis sought to replace upfront discounts with post-dispensing rebates to enhance verification and curb perceived abuse, despite HRSA rejecting them as inconsistent with the statute's ceiling-price requirement.^[144] ^[145] J&J implemented its model unilaterally in 2023 for certain drugs, prompting HRSA enforcement threats; in response, J&J sued in November 2024, claiming HRSA lacked authority to prohibit alternatives that achieve equivalent discounts.^[146] A U.S. District Court ruled against J&J in June 2025, upholding HRSA's position that rebate models violate the upfront pricing mandate, while similar suits by other manufacturers remain active as of September 2025.^[147] ^[136] In Genesis Healthcare, Inc. v. Becerra (decided November 2023), a South Carolina district court invalidated HRSA's restrictive interpretation of "patient" under the 340B statute during an audit of Genesis, a skilled nursing facility covered entity.^[148] HRSA had deemed prescriptions diverted if not initiated directly by the entity's providers, even for patients receiving ongoing care; the court granted partial summary judgment to Genesis, holding that the statute defines patients broadly as individuals receiving services from the entity, without HRSA's added limitations, thus exceeding agency authority absent clear congressional intent.^[61] ^[149] This ruling expanded permissible 340B use but drew manufacturer criticism for enabling potential overreach, while entities viewed it as affirming program scope to support vulnerable patients.^[150] HRSA's audit trends into 2025 have intensified scrutiny, with manufacturer-initiated audits of covered entities rising amid restrictions, though federal data indicate covered entities maintain high compliance rates (e.g., low diversion findings), while manufacturer audits frequently uncover overcharges to the program.^[77] ^[151] In response, safety-net hospitals sued HRSA in October 2024, alleging improper approval of J&J's audit requests without good-faith resolution efforts, claiming procedural violations under the APA.^[152] Manufacturers maintain restrictions safeguard statutory prohibitions on abuse, supported by empirical audit discrepancies, whereas entities and HRSA assert they undermine access without evidence of widespread entity noncompliance.^[153] ^[154]

Reform Proposals and Recent Oversight Efforts

Various legislative proposals in the 2020s have sought to introduce patient income verification requirements to the 340B program, ensuring that discounts primarily benefit low-income and uninsured individuals as originally intended. For instance, the Goldwater Institute's July 2025 policy report recommends mandating income verification or demographic reporting by covered entities to confirm that savings reach eligible disadvantaged patients, arguing that current lax eligibility checks enable diversion of benefits to non-qualifying recipients.^[155] Similarly, a September 2025 bill introduced by Representatives Earl Carter and Marjorie Taylor Greene proposes direct pass-through of 340B savings via reduced out-of-pocket costs for qualifying low-income patients, coupled with enhanced verification mechanisms to curb revenue maximization unrelated to patient care.^[156] Transparency reporting mandates form another core reform pillar, with bills like the 340B Transparency Act (H.R. 3290, introduced May 2023) aiming to amend the Public Health Service Act for greater oversight, including annual data submissions on discount usage and patient outcomes.^[157] The Goldwater report further advocates detailed public disclosures via Medicare cost report addendums, covering patient volumes, charity care expenditures, contract pharmacy arrangements, and allocation of savings, to expose exploitation patterns where entities retain windfalls without proportional aid to the vulnerable.^[155] Market-oriented fixes in these proposals include restricting the proliferation of contract pharmacies—now exceeding 33,000 unique locations—to prevent duplicate discounts and revenue leakage, while imposing user fees capped at 0.1% of savings to fund independent audits and a third-party clearinghouse for transaction verification.^[155] Recent oversight efforts intensified in 2025, with the Health Resources and Services Administration (HRSA) launching a voluntary 340B Rebate Model Pilot Program on July 31 for select Medicare-negotiated drugs, testing a rebate system over upfront discounts to improve pricing accuracy and reduce diversion risks through post-purchase true-ups.^[158] HRSA's fiscal year 2025 audits revealed overcharges by manufacturers like Cycle Pharmaceuticals and Rhodes Pharmaceuticals, prompting corrective actions and underscoring the need for robust compliance checks on both entities and providers.^[151] Concurrently, the Centers for Medicare & Medicaid Services (CMS) proposed in its CY 2026 Outpatient Prospective Payment System (OPPS) rule—released July 2025—a 2% reduction in the OPPS conversion factor for non-drug services to accelerate recoupment of $7.8 billion in prior overpayments to 340B hospitals, aiming to neutralize inflated reimbursements that exacerbate program distortions.^[159] These initiatives, informed by analyses highlighting misaligned incentives, prioritize accountability to realign the program with its safety-net mission amid evidence of $66.3 billion in 2023 outpatient drug purchases yielding disproportionate provider profits over patient benefits.^[155]

Intersections with Other Programs

340B and Medicaid Interactions

The 340B Drug Pricing Program prohibits manufacturers from providing both a 340B discount and a Medicaid drug rebate for the same unit of a covered outpatient drug, a restriction aimed at preventing duplicate discounts.^[160] State Medicaid agencies manage claims processing for fee-for-service (FFS) and managed care organization (MCO) beneficiaries, requiring covered entities to track 340B-purchased drugs dispensed to Medicaid patients and exclude them from rebate-eligible submissions.^[161] The Health Resources and Services Administration (HRSA) supports this through the Medicaid Exclusion File (MEF), which identifies 340B claims to facilitate rebate avoidance, while covered entities must coordinate with states to ensure compliance.^[162] State policies for duplicate avoidance vary, with some implementing virtual carve-outs—where MCO contracts exclude 340B drugs from rebate calculations—and others relying on self-reporting by covered entities or post-payment audits.^[44] In FFS programs, states generally prohibit rebate claims on 340B drugs, but enforcement in MCO settings is less uniform due to decentralized claims data and limited federal guidance.^[163] HRSA's Office of Pharmacy Affairs has issued guidance emphasizing entity responsibility for preventing duplicates, yet gaps persist in systematic verification across states.^[164] A 2020 Government Accountability Office (GAO) report highlighted oversight weaknesses, noting that HRSA had not issued specific guidance or conducted audits for duplicate discounts in Medicaid managed care claims, despite known risks from fragmented data systems.^[44] The GAO recommended enhanced coordination between HRSA and the Centers for Medicare & Medicaid Services (CMS) to improve tracking and resolution processes, as states' varying policies can enable inadvertent rebate claims on 340B drugs.^[163] These inconsistencies underscore broader challenges in ensuring rebate ineligibility for 340B drugs without robust, standardized state-level mechanisms.^[21]

Medicare Reimbursement Adjustments

Under Medicare Part B, separately payable outpatient drugs are reimbursed at the average sales price (ASP) plus 6 percent, a rate applied uniformly since the program's inception to reflect manufacturer-reported transaction prices excluding certain discounts. For drugs acquired through the 340B program, covered entities obtain them at ceiling prices typically 23 to 50 percent below the average wholesale price, yielding a substantial reimbursement spread when billed at ASP plus 6 percent—often exceeding 30 percent margins on acquisition costs for high-volume oncology and other therapies. This mechanism, unaltered by the Affordable Care Act's broader payment reforms, effectively inflates entity revenues by decoupling low purchase prices from standard reimbursement, with 340B hospitals realizing an estimated $6.7 billion in Part B spreads annually as of recent analyses.^[165]^[166] In response to these spreads, the Centers for Medicare & Medicaid Services (CMS) implemented targeted reductions under the 2018 Outpatient Prospective Payment System (OPPS) rule, lowering 340B drug payments in hospital outpatient departments to ASP minus 22.5 percent to approximate non-340B acquisition costs and mitigate overpayments. These cuts, effective from January 1, 2018, through 2022, reduced Medicare expenditures by approximately $4.3 billion over five years but were invalidated by the Supreme Court in American Hospital Association v. Becerra (2022), which held that CMS lacked statutory authority for the adjustment without explicit congressional direction. CMS subsequently remedied affected providers by restoring payments to ASP plus 6 percent retroactively and prospectively via the 2023 OPPS final rule, reinstating full spreads and prompting budget-neutral offsets through 0.5 percent annual reductions to the OPPS conversion factor for all non-drug services from 2024 onward.^[166]^[167]^[168] For calendar year 2026, CMS has proposed accelerating these offsets to recoup remedy costs more rapidly, including options for a 2 percent annual reduction to the OPPS conversion factor over six years or 5 percent over three years, alongside a new hospital drug acquisition cost survey to inform future 340B-specific adjustments under Part B and Part D. These proposals, if finalized, would diminish net revenues for 340B entities by compressing overall OPPS payments, with modeling indicating potential annual losses of $1.2 to $2.5 billion for qualifying hospitals depending on the trajectory selected. Critics, including MedPAC, argue such measures fail to fully address persistent spreads, as 340B acquisition discounts remain decoupled from reimbursement, incentivizing program expansion—evidenced by a 25 percent rise in 340B hospital claims volume from 2018 to 2023—while shifting costs to non-340B providers and payers through higher commercial prices.^[169]^[170]^[171]

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340B Drug Pricing Program Overview
The purpose of the 340B program is to enable covered entities to stretch scarce federal resources as far as possible, reaching more eligible patients.
[52]
42 CFR § 10.10 - Ceiling price for a covered outpatient drug.
The 340B ceiling price for a covered outpatient drug is equal to the Average Manufacturer Price (AMP) from the preceding calendar quarter for the smallest unit ...
[53]
Disproportionate Share Hospitals - 340B Eligibility - HRSA
Have a disproportionate share adjustment percentage greater than 11.75% for the most-recently filed cost report. For-profit hospitals aren't eligible to ...
[54]
340B Drug Discount Program: Information about Hospitals That ...
May 11, 2023 · To be eligible for the program, hospitals generally must treat a minimum percentage of low-income Medicare and Medicaid patients. In 2022, ...
[55]
HRSA Publishes Final Rule Addressing 340B Ceiling Price ...
The rule addresses 340B ceiling price calculations, uses a discounted WAC formula for new drugs, and penalties up to $5,000 for overcharging.
[56]
340B and the Warped Rhetoric of Healthcare Compassion
For 2021, discounted purchases under the 340B program reached a record $43.9 billion—an astonishing $5.9 billion (+15.6%) higher than its 2020 counterpart. ...
[57]
FAQs - HRSA
The 340B ceiling price is the maximum statutory price a manufacturer can charge a covered entity for the purchase of a covered outpatient drug.
[58]
Exclusion of Orphan Drugs for Certain Covered Entities Under 340B ...
Jul 23, 2013 · Therefore, orphan drugs used for common conditions are subject to the same general rules and requirements under the 340B Program as all other ...<|separator|>
[59]
Exclusion of Orphan Drugs for Certain Covered Entities Under 340B ...
May 20, 2011 · Entities are required to notify HRSA that they will be purchasing all designated orphan drugs outside the 340B Program when they enroll in the ...
[60]
[PDF] Federal Register / Vol. 61, No. 207 / Thursday, October 24, 1996 ...
Oct 24, 1996 · Response: The definition of a. ''patient'' was developed in order to identify those individuals eligible to receive 340B drugs from covered.
[61]
Court Guts 340B Program “Patient” Definition, Opening Door to More ...
Nov 5, 2023 · The only statutory requirement for 340B patient eligibility is that the person be a patient of the covered entity. The 340B statute does not ...
[62]
Judge Strikes Down Narrow 340B Patient Definition-ASHP
Nov 7, 2023 · HRSA's proposed definition of “patient” would have included only those patients whose care was initiated by the covered entity, a very ...Missing: ambiguities clarifications
[63]
HRSA Patient Definition Guidelines | 340B Program Updates
Nov 18, 2024 · In January 2024, HRSA created a new webpage where all resources related to compliance can be found including the “HRSA Patient Definition Guidelines,”Missing: ambiguities clarifications
[64]
340B Arrangements with Community and Specialty Pharmacies ...
Sep 9, 2024 · For these reasons, contract pharmacies are used by more than 80% of rural 340B hospitals to ensure patients have access to outpatient drugs.
[65]
[PDF] Overview of the 340B Program and Implications of Program Growth ...
Jun 30, 2023 · contract pharmacy arrangement growth. The number of contract pharmacy arrangements has increased from 2,300 in 2010 to 100,451 in 2022 ...
[66]
[PDF] 340B Drug Pricing Program: Contract Pharmacy Arrangements
Contract pharmacies extend 340B providers, especially in rural areas, and allow hospitals to access a wide range of drugs, even if they don't have them in- ...
[67]
Outcomes of the 340B Drug Pricing Program: A Scoping Review
Nov 22, 2023 · This scoping review found evidence that the 340B program was associated with revenue to hospitals, clinics, and pharmacies; expanded services for patients; and ...<|control11|><|separator|>
[68]
[PDF] 340B-restrictions-summary-chart.pdf - NACHC
Sep 6, 2023 · Beginning mid-2020, pharmaceutical manufacturers started overcharging covered entities (CEs) on 340B drugs shipped to CE contract pharmacies.Missing: Takeda | Show results with:Takeda
[69]
Johnson & Johnson is the 16th Manufacturer to Restrict ... - RWC-340B
J&J requires hospitals to use 340B ESP for 340B drugs at contract pharmacies, with limited exceptions, and applies this to non-340B "own use" drugs.Missing: Takeda | Show results with:Takeda
[70]
340B reports
This study finds that hospitals participating in 340B spend a significantly greater amount of their net patient revenue on uncompensated and unreimbursed care ...Missing: modest | Show results with:modest
[71]
340B Rebate Model Pilot Program - HRSA
Aug 14, 2025 · The 340B rebate model pilot is applicable to all selected drugs under IPAY 2026 to the extent they are covered outpatient drugs, including ...
[72]
From Discounts to Rebates: The Next Chapter in 340B - Buchalter
Sep 19, 2025 · HHS will notify approved manufacturers by October 15, 2025, with the pilot program set to begin on January 1, 2026. The pilot program represents ...
[73]
Duplicate Discount Prohibition - HRSA
Jul 16, 2020 · 42 USC 256b(a)(5)(A)(i) prohibits duplicate discounts; that is, manufacturers are not required to provide a discounted 340B price and a Medicaid drug rebate ...
[74]
42 CFR Part 10 -- 340B Drug Pricing Program - eCFR
This part implements section 340B of the Public Health Service Act (PHSA) “Limitation on Prices of Drugs Purchased by Covered Entities.”
[75]
Drug Discount Program: Federal Oversight of Compliance at 340B ...
Jun 21, 2018 · GAO is making seven recommendations, including that HRSA's audits assess for duplicate discounts in Medicaid managed care, and HRSA require ...Missing: 2013-2025 | Show results with:2013-2025
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340B 101 - Paragon Health Institute
Sep 11, 2024 · A 2020 GAO report noted a total of 1,536 violations of the 340B rules from 1,241 audits HRSA conducted between fiscal years 2012 and 2019.
[77]
More Drug Company Oversight Needed to Maintain Compliance ...
Jun 16, 2025 · The analysis of federal audit data shows high rates of compliance for audited 340B hospitals and consistently high rates of noncompliance among audited drug ...
[78]
Illegal abuse of 340B hurts us all - PhRMA
Oct 3, 2024 · There is clear evidence many hospitals are exploiting loopholes in the 340B program, driving up costs for patients, employers and taxpayers in the process.
[79]
[PDF] The 340B Drug pricing program - American Hospital Association
Mar 13, 2024 · HRSA, which oversees the 340B program, estimates that the average 340B discount for a drug can range between 25 percent and 50 percent.5.
[80]
2022 340B Covered Entity Purchases - HRSA
Sep 28, 2023 · In calendar year 2022, 340B covered entities purchased $53.7 billion in covered outpatient drugs under the 340B Program.
[81]
Safety net hospitals say pharma's 340B drug restrictions already ...
Jan 31, 2022 · “For rural hospitals, a loss of 340B savings can lead to the closure of facilities that are often the only source of care for broad areas of our ...Missing: studies causal
[82]
340B Drug Pricing Program and Hospital Provision of ... - AJMC
Oct 11, 2021 · Participation in the 340B Drug Pricing Program has not been associated with increases in hospital-reported uncompensated care provision.
[83]
The unintended consequences of the 340B safety‐net drug discount ...
The 340B Drug Pricing Program was created under the Veterans Health Care Act of 1992 to increase access to outpatient medications for low‐income and uninsured ...
[84]
Your Guide to Legislation on the 340B Drug Pricing Program
Apr 16, 2025 · Codify the use of contract pharmacies into statute. · Prevent hospitals from unlimited use of contract pharmacies and expansions into wealthier, ...
[85]
Relationship between initiation of 340B participation and hospital ...
Mar 18, 2020 · New 340B participation was not associated with a change in uncompensated care, but was associated with a 28.9 percent increase in charity care spending.
[86]
[PDF] Charity Care at 340B Hospitals is on a Downward Trend - AIR340B
Specifically, 25% of 340B hospitals provided 80% of the total charity care provided by all 340B hospitals, in FY 2021 (Figure 2).
[87]
[PDF] DSH Hospitals' 340B Profit Often Exceeds Charity Care Spending
The fact that charity care costs account for only 42 percent of DSH hospitals' 340B profit, on average, implies that DSH hospitals primarily use 340B profit ...
[88]
The 340B Drug Discount Program: Hospitals Generate Profits ... - NIH
340B hospitals can generate profits by prescribing drugs to patients who have private insurance or Medicare. Other participating medical providers are required ...
[89]
Public Hospitals May Use the 340B Program Differently Than ...
May 3, 2024 · The 340B program is a US federal program that grants participating hospitals and clinics access to prescription drugs at substantial discounts.
[90]
[PDF] 340B: A Critical Program for Health Centers | NACHC
Jun 13, 2022 · • 92% of respondents utilize 340B savings to increase access for low-income and/or rural patients by maintaining or expanding services in ...Missing: empirical | Show results with:empirical
[91]
The impacts of the 340B Program on health care quality for low ...
Jul 20, 2023 · Our results add to a broad evidence base that the 340B Program is not benefitting low‐income patients, either through increased access or better ...
[92]
[PDF] Navigating the 340B Program: Impacts on Cancer Care and Patient ...
Feb 24, 2025 · The 340B Drug Pricing Program was launched in the United States to provide medicines and treatments at an affordable price to vulnerable ...
[93]
One Way to Fix America's Broken Hospitals: Reform 340B
Sep 23, 2024 · In Medicare Part B, outpatient drugs are generally reimbursed at 106% of the average sales price, despite 340B hospitals receiving an average 25 ...
[94]
What To Do About 340B | Blog Latest News - Pioneer Institute
Dec 11, 2024 · If a hospital can buy a cancer drug for $75,000 under 340B, then they can bill the Medicare program for $200,000 and come away with a $125,000 ...
[95]
[PDF] The 340B Drug Pricing Program and its Potential Impacts on Annual ...
Aug 15, 2024 · (Richmond,. VA)—the hospital that saw the highest percentage revenue increase of 9,618.93%—reported an annual revenue of $78,446,609 in FY 2003 ...
[96]
https://www.patientsrising.org/340b-patient-definition-fix/
[97]
Is the 340B Program fueling nonprofit hospital consolidation?
Oct 8, 2025 · For recently merged hospitals, 340B participation correlated with profit margins that were 5.2% to 7.0% higher than those of non-340B hospitals.
[98]
Fact Sheet: The 340B Drug Pricing Program | AHA
Jun 30, 2025 · In 2022 alone, 340B hospitals provided nearly $100 billion in benefits to their communities which was a 47% increase from 2019. Without the ...
[99]
Hospitals and 340B - PhRMA
They get away with this by exploiting, sometimes illegally, the 340B hospital markup program. This government program was created in 1992 to help patients ...
[100]
5 Questions with Sayeh Nikpay: The 340B Drug Pricing Program
As I discuss above, 340B hospitals are not required to report revenues generated by the program, nor compelled to demonstrate how they use the generated revenue ...
[101]
Program Integrity: FY25 Audit Results - HRSA
Sep 23, 2025 · Diversion – 340B drugs dispensed at contract pharmacy for prescription written at ineligible sites. ... Audit closure date: April 2, 2025.Missing: widespread | Show results with:widespread
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Drug Pricing: Manufacturer Discounts in the 340B Program Offer ...
Drug Pricing: Manufacturer Discounts in the 340B Program Offer Benefits, but Federal Oversight Needs Improvement. GAO-11-836 Published: Sep ...
[103]
PhRMA urges HRSA not to impede new 340B pricing approaches to ...
Oct 18, 2024 · Duplicate discounts are an absolute prohibition under the law, but the issue has gone largely unaddressed. Worse, new requirements under the ...
[104]
The 340B Drug Pricing Program is failing patients - Freopp
Jun 26, 2025 · Currently, HRSA's oversight is limited, with audits focusing primarily on preventing diversion (e.g., selling 340B drugs to ineligible patients ...
[105]
How Nonprofit Hospitals Can Profit – Handsomely | USC Center for ...
Four 2013 Pulitzer Prize finalists give an inside look at "Prognosis: Profits," a series about North Carolina's nonprofit hospitals, the huge sums of money ...
[106]
Prognosis Profits | Association of Health Care Journalists
The two newspapers investigated the practices of North Carolina's non-profit hospitals. The hospitals generated huge profit margins during the Great Recession.
[107]
Examining Hospital Price Transparency, Drug Profits, and the 340B ...
Sep 12, 2022 · 340B hospitals' own self-reported pricing data reveals that they price the top oncology drugs at 4.9 times their 340B acquisition costs, ...
[108]
How the 340B hospital markup program and PBMs drive up costs for ...
May 16, 2025 · Instead, the program drives up costs for patients, taxpayers and employers with hospitals marking up medicines by as much as 1,000% or more.Missing: inflation 10x examples<|separator|>
[109]
The 340B Hospital Markup Program is Costing Taxpayers ... - PhRMA
Oct 17, 2025 · Markups from the program contribute nearly $65 billion to drug spending, benefiting hospitals and clinics rather than patients. This cost burden ...Missing: insurer inflation 10x examples
[110]
The 340B Drug Pricing Program and Hospital Provision of ... - NIH
The 340B Drug Pricing Program is a federal program that entitles eligible hospitals to manufacturer discounts on purchases of drugs administered or prescribed ...
[111]
Cost Consequences of the 340B Drug Discount Program - PMC - NIH
Third, drug manufacturers will likely seek to increase list prices even further to offset revenue losses incurred as a larger number of drug sales become ...
[112]
[PDF] THE IMPACT OF THE 340B PROGRAM ON DRUG PRICES ...
The authors conclude that a large 340B market share for a product may encourage manufacturers to offer discounts through reduced list prices rather than through ...
[113]
Specialty Drug Price Trends in the Federal 340B Drug Discount ...
For specialty drug classes, the average growth rates per year were 14% for the WAC price and 6% for the 340B price. For certain specialty drug classes, such as ...Missing: correlation hikes
[114]
[PDF] The Hidden Costs of 340B to Employers
May 5, 2024 · The 4.2% increase in the cost of drugs due to the 340B program in the first part of this study corresponds to a $5.2B increase in costs for ...
[115]
New Study Reinforces Impact of 340B Drug Pricing Program on ...
Apr 1, 2025 · The analysis reinforces the mounting proof that the $66 billion and growing 340B program is contributing to higher costs for commercial employers and their ...<|control11|><|separator|>
[116]
[PDF] Effects of 340B on Pharmaceutical Innovation - Matrix Global Advisors
Jun 15, 2025 · The first scenario, where 340B discounts increase from 6 percent to 9 percent of manufacturer revenues, would result in a $3.3 billion–$4.9 ...
[117]
Growth in the 340B Drug Pricing Program
Sep 9, 2025 · CBO examines drug purchases made through the 340B program in 2021, growth in such purchases from 2010 to 2021, and factors that contributed ...
[118]
340B Program Spending Increases Due to Market Trends and ...
Sep 11, 2025 · Participating hospitals in the Prime Vendor Program and the 340B program spent nearly $37.3 billion more on drugs from 2010 to 2021.
[119]
AHA Claps Back at Drug Companies in Conflict Over 340B program
Jun 27, 2025 · The AHA report showed that 39.7% of audited hospitals violated diversion rules and 30.8% violated duplicate discount rules in 2018 compared to ...
[120]
Drug Pricing Program: HHS Uses Multiple Mechanisms to Help ...
Dec 14, 2020 · Drug Pricing Program: HHS Uses Multiple Mechanisms to Help Ensure Compliance with 340B Requirements. GAO-21-107 Published: Dec 14, 2020.
[121]
Medicaid loses billions as 340B program expansion collides with ...
Jul 21, 2025 · The 340B Drug Pricing Program diverted $6.5 billion in rebates away from Medicaid in 2024, with state governments shouldering $2.3 billion ...
[122]
https://www.help.senate.gov/download/rosenberg-testimonypdf
[123]
[PDF] Policy Options for Addressing Medicare Payment Differentials ...
In addition, hospitals have a higher proportion of charity care and Medicaid patients than ASCs or POs. • Physician interviewees expressed a strong ...
[124]
A comparison of medication access services at 340B and non-340B ...
The findings of this study suggest that 340B hospitals provide more medication access services, on average, than comparably sized non-340B hospitals. They also ...
[125]
[PDF] The 340B Program: Benefits and Limitations - Marshall Digital Scholar
The purpose of ongoing research is to analyze and quantify the financial impact and humanistic and challenges concerning the 340B program in the tri-state ...Missing: 2023 | Show results with:2023
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[PDF] GCOA Issue Brief_The 340B Drug Pricing Program v2
Jul 26, 2025 · Similarly, overly broad criteria have led to a surge in the number of covered entities participating in the 340B program, raising questions ...
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[PDF] 340B Drug Pricing Program: Analysis Reveals $40 Billion in Profits ...
We estimate that in 2019, 340B created over $40 billion in profits which were shared between covered entities, contract pharmacies, and possibly patients (in ...Missing: COG | Show results with:COG
[128]
Do hospitals profit from drug discounts meant for poor, uninsured ...
Apr 3, 2013 · For example, Duke University Hospital purchased $65.8 million in drugs through the 340B program and saved $48.3 million. After selling the drugs ...
[129]
Newspaper: Hospitals inflate costs of chemo drugs - Gaston Gazette
Sep 23, 2012 · Large nonprofit hospitals in North Carolina are dramatically inflating prices on chemotherapy drugs at a time when they are cornering more of the market on ...
[130]
Examining the 340B Drug Pricing Program - Congress.gov
Examining the 340B Drug Pricing Program114th Congress (2015-2016). House Committee Meeting. Hide Overview. Committee: House Energy and Commerce. Subcommittee ...
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New report finds more abuse of 340B program by hospitals and drug ...
Mar 24, 2025 · A new report by the Wall Street Journal reveals abuse of the 340B hospital markup program is getting worse as hospitals and middlemen find new ways to profit ...Missing: arbitrage | Show results with:arbitrage
[132]
Chair Cassidy Releases Report on 340B Re...
Apr 24, 2025 · “This investigation underscores that there are transparency and oversight concerns that prevent 340B discounts from translating to better access ...
[133]
Senator's Probe Of 340B Program Finds 'Transparency And ...
Apr 25, 2025 · Republican Sen. Bill Cassidy, a Louisiana doctor, released a report Thursday detailing "much-needed" reforms to the drug pricing program.
[134]
Ohio's Cleveland Clinic faces questions over booming subsidies
May 30, 2025 · “These hospitals were selected for this investigation as a result of media reports alleging abuse of the 340B Program, such as hospitals ...
[135]
Top Republican calls for 340B reform in long-awaited investigation
Apr 28, 2025 · Sen. Bill Cassidy's report calls on Congress to improve the transparency of the drug discount program in a move praised by pharmaceutical companies and ...
[136]
The 340B Drug Discount Program: Litigation Topics and Trends
Sep 10, 2025 · In September 1994, HRSA first indicated that the 340B statute ... Office of Pharmacy Affairs, which administers the 340B program, to CMS.
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Contract Pharmacy - RWC-340B
CHART: Pharmaceutical Manufacturer 340B Price Restriction Policies and Exemptions Summary (Updated 7/7/2023) ; Amicus Brief by RWC-340B and Others: Novo Nordisk ...
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340B Update: Congress and the Administration Respond to Drug ...
Sep 28, 2020 · In July, Eli Lilly announced that it would cease distribution of its erectile dysfunction drug Cialis to 340B contract pharmacies and limit ...<|separator|>
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[PDF] What to Expect from the 340B Drug Pricing Program - NET
On August 17, 2020, AstraZeneca similarly informed covered entities that it would stop replenishing drugs to contract pharmacies beginning on October 1, 2020.
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Novo Nordisk Tightens Restrictions on 340B Drugs Dispensed by ...
On June 1, 2023, Novo Nordisk and Organon each announced restrictions on hospital access to 340B drugs at contract pharmacies.Missing: virtual gateways<|separator|>
[141]
[PDF] Case 1:21-cv-00081-SEB-MJD Document 1 Filed 01/12/21 Page 1 ...
Yet when Lilly announced that it would no longer allow an unlimited number of contract pharmacies to demand discounts, Defendants first threatened Lilly with ...
[142]
Eli Lilly and Company et al. v. Department of Health and Human ...
Sep 22, 2025 · Requiring drug manufacturers to offer discounted prescription drugs to certain contract pharmacies under the 340B Drug Pricing Program ...Missing: Azar | Show results with:Azar
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Stop 340B Cuts - 340B Health
340B cuts are drug companies reducing discounts to safety-net hospitals, causing billions in losses, forcing service cuts, and harming patients.Missing: Takeda | Show results with:Takeda
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Unpacking Johnson & Johnson's Lawsuit Over 340B Rebate Model
Nov 19, 2024 · In its lawsuit, J&J argues that HRSA's threatened enforcement action and refusal to allow the manufacturer to institute a rebate model was ...
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340B Program Rebate, Drug Manufacturers Sue HRSA
Dec 4, 2024 · As of December 1, however, four prescription drug manufacturers have sued HRSA challenging the agency's ability to review and approve 340B ...
[146]
Eli Lilly Sues HRSA Over 340B Rebate Model | AAMC
Nov 22, 2024 · In the legal complaint, Eli Lilly argues that HRSA's prohibition of a rebate model for 340B drugs violates both the 340B statute and the ...<|separator|>
[147]
Judge rules against J&J, for HHS and 340B hospitals in rebate ...
Jun 27, 2025 · A US District Court for the District of Columbia judge June 27 ruled against Johnson & Johnson and sided with the Department of Health and Human Services and ...
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In Genesis Case, South Carolina District Court Scraps HRSA ...
Nov 28, 2023 · The court found that an individual only needs to be a patient of the covered entity for purposes of 340B eligibility. The plain wording of the ...Missing: orphan | Show results with:orphan
[149]
Legal challenges to the 340B drug pricing program - NIH
The 340B Drug Pricing Program (“340B Program”) was created to help safety net hospitals and clinics “stretch scarce federal resources” by discounting the price ...
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South Carolina Court Rejects Restrictive 340B Definition
Nov 16, 2023 · Genesis subsequently filed suit challenging HRSA's actions. Shortly after the suit was filed, HRSA reinstated Genesis in the 340B Program.Missing: orphan | Show results with:orphan
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FY 2025 Manufacturer Audit Results - HRSA
Sep 23, 2025 · Updated 9/23/25. The results chart includes audits where the findings have been finalized. Remaining audits are still under review.Missing: widespread diversion
[152]
Hospitals Sue HRSA in Response to 340B Audits
Oct 28, 2024 · HRSA audit guidelines require manufacturers to offer 340B covered entities a 30-day window to resolve a suspected infraction in good faith ...Missing: overcharges recouped millions
[153]
Recent Lawsuits Question HRSA Oversight of the 340B Program
Jan 15, 2025 · Among other things, these suits claim that HRSA lacks the authority to restrict how drug companies can distribute 340B discounts. The suits ...<|separator|>
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[PDF] More Drug Company Oversight Needed to Maintain Compliance ...
Between FY 2018 and FY 2022, 340B hospital audit findings for duplicate discount and diversion decreased by a combined 62.1%. Specifically for duplicate.
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Reforming the 340B Drug Discount Program - Goldwater Institute
Jul 8, 2025 · The 340B Drug Discount Program was created by Congress in 1992 as part of the Veteran's Health Care Act (PL 102-585).
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Carter, Harshbarger Introduce Legislation to Ensure Access and ...
Sep 10, 2025 · This legislation establishes critical oversight and transparency of the 340B program while providing clear, practical, and achievable solutions ...
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H.R.3290 - 118th Congress (2023-2024): 340B Transparency Act
Summary of H.R.3290 - 118th Congress (2023-2024): 340B Transparency Act.
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Application Process for the 340B Rebate Model Pilot Program
Aug 1, 2025 · Manufacturer plans for participation in the 340B Rebate Model Pilot Program should be submitted to 340BPricing@hrsa.gov no later than September ...
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CMS proposes, you prepare: understanding the CY 2026 OPPS ...
Jul 31, 2025 · CMS now proposes to revise the OPPS conversion factor reduction from 0.5% to 2% in order to recoup the overpayment amount of $7.8 billion faster ...<|separator|>
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[PDF] 340B CIB - HRSA
The purpose of this Informational Bulletin is to outline a number of best practices that states are encouraged to consider to avoid billing manufacturers ...
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The 340B Drug Pricing Program and Medicaid Drug Rebate Program
The Medicaid Drug Rebate Program and the 340B Drug Pricing Program both require drug manufacturers to provide significant discounts on their products.Missing: origins rising
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Understanding the Medicaid Prescription Drug Rebate Program - KFF
Nov 12, 2019 · In response to rising drug prices and projected increased Medicaid spending, the Medicaid Prescription Drug Rebate Program (MDRP) was created in ...What is the Medicaid drug... · What is the role of managed...
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[PDF] GAO-20-212, 340B Drug Discount Program: Oversight of the ...
Jan 21, 2020 · The 340B program and Medicaid rebates both require discounts, but duplicate discounts are prohibited. Limited oversight may increase the risk ...
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Policy Clarification: Duplicate Discount - HRSA
The issue of duplicate discounts in the 340B Program is one that touches all stakeholders in the program, and requires unilateral cooperation to achieve ...<|separator|>
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Medicare Part B Drug Average Sales Price - CMS
Sep 30, 2025 · Medicare pays most separately payable drugs and biological products at a rate of ASP plus 6%. To calculate the ASP and payment of each drug ...
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[PDF] Initial findings from analysis of Medicare Part B payment rates and ...
Apr 12, 2024 · most 340B drugs paid for under the OPPS. • 2018–2022: ASP – 22.5% for most drugs furnished by 340B hospitals. • In 2022, Supreme Court ruled ...
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Remedy for the 340B-Acquired Drug Payment Policy for ... - CMS
Nov 2, 2023 · In the CY 2023 OPPS/ASC final rule, CMS finalized a general payment rate of ASP plus 6% for drugs acquired through the 340B Program, consistent ...
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Remedy for the 340B-Acquired Drug Payment Policy for Calendar ...
Nov 8, 2023 · CMS adopted a policy beginning in 2018 generally to pay an adjusted amount of ASP minus 22.5 percent for certain separately payable drugs or biologicals ...
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Calendar Year 2026 Hospital Outpatient Prospective Payment ...
Jul 15, 2025 · CMS proposes updating OPPS payment rates for hospitals that meet applicable quality reporting requirements by 2.4%.
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[PDF] PART B DRUGS PAYMENT SYSTEMS - MedPAC
For 340B hospitals, Medicare established a lower rate (ASP – 22.5 percent) for Part B drugs (except for those with pass-through status) between 2018 and 2022; ...<|separator|>
[171]
CMS Proposes Changes That Would Impact 340B Covered Entities
Jul 22, 2025 · The survey will be open beginning at the end of 2025 through early 2026. CMS is seeking comments on how to interpret non-responses to the survey ...