Shawn Gremminger, President and CEO of the National Alliance of Healthcare Purchaser Coalitions, expressed that employers support the 340B program's intent but seek reforms to prevent affluent hospitals from misusing funds. This statement was made during an interview with MedCity News.
"We have no problem with the fact that we know that employer money, effectively, is going into those institutions," said Gremminger. "Rural hospitals … need the money. It's the abuse by very large, very profitable, tax-exempt institutions that I think needs to change."
The 340B Drug Pricing Program, established in 1992, allows eligible healthcare organizations to purchase outpatient drugs at reduced prices. The program's goal is to enable providers to extend federal resources and support vulnerable patients. According to the U.S. Department of Health and Human Services, participation is restricted to safety-net providers meeting specific federal criteria.
A report by the Medicare Payment Advisory Commission (MedPAC) in 2023 found that 57% of 340B hospitals had operating margins above the national median. The report noted that most program discounts benefited large hospital systems. MedPAC recommended enhanced oversight to ensure hospital participation aligns with the program’s original purpose.
According to a study by the Berkeley Research Group in 2022, hospitals participating in the 340B program generated $54 billion in gross drug revenue. The study indicated that financial benefits often did not translate into direct savings for patients, with hospital markups contributing to higher overall drug spending.
Gremminger became President and CEO of the National Alliance of Healthcare Purchaser Coalitions in November 2023. He previously led policy efforts at the Purchaser Business Group on Health and served as Director of Health Policy at Families USA. His career has focused on employer healthcare strategy and federal health policy.
