PhRMA has announced that the 340B program contributes to higher prescription costs for patients in the United States. The announcement was made on X, a social media platform.
According to a blog post by PhRMA, the 340B Drug Pricing Program allows certain large, tax-exempt hospitals to acquire outpatient prescription medicines at extremely low prices, sometimes "as little as a penny" per dose, while still billing insurers or patients at full, non-discounted rates. This practice has led to significant markups, with hospitals reportedly reselling these discounted drugs at "thousands of dollars" above the acquisition price. As a result, extra costs are shifted to private insurers and patients through higher insurance premiums and out-of-pocket expenses. The policy issue arises because hospitals are permitted to charge either the full chargemaster rate or negotiated reimbursement, regardless of the deep discounts received through 340B.
According to the Government Accountability Office (GAO), hospitals participating in the 340B program can reinvest savings into services such as medication assistance, expanded care access, and community outreach. However, there is no federal requirement that hospitals report how they use 340B revenue. This lack of transparency has raised concerns over whether savings are consistently used to benefit low-income patients.
A study published in 2023 in Health Services Research and Managerial Epidemiology found that participation in the 340B program did not lead to statistically significant improvements in mortality rates for low-income patients. The analysis examined outcomes across multiple health systems and raised questions about the program’s effectiveness in achieving its intended public health goals. The study concluded that financial incentives alone may not be sufficient to improve health outcomes.
PhRMA (the Pharmaceutical Research and Manufacturers of America) is a U.S. trade group representing leading biopharmaceutical and drug innovation companies. The organization is active in policy advocacy, supporting measures that aim to balance patient affordability with the need to incentivize drug research and development. PhRMA has been a vocal proponent for reforms to the 340B program to increase transparency and prevent unintended financial exploitation by hospitals. It regularly publishes research, analysis, and commentary on pharmaceutical pricing and healthcare system costs.
