The Mackinac Center announced on X that the federal 340B drug pricing program allows hospitals and contract pharmacies to profit from discounted drugs, with little evidence that patients benefit from the savings.
According to the Mackinac Center, the 340B Drug Pricing Program—established by Congress in 1992—was designed to help hospitals provide affordable medications to uninsured and low-income patients but has since become a source of revenue for hospitals and contract pharmacies. The Center argues that hospitals often purchase drugs at steeply discounted prices, resell them at full cost, and retain the profit, with no federal requirement to pass savings on to patients. Policy experts at the Mackinac Center said that this dynamic has transformed a well-intentioned public health program into a mechanism of government favoritism, distorting competition and disproportionately benefiting large hospital systems.
According to a 2023 report by the U.S. Government Accountability Office (GAO), the 340B program has grown significantly over the past decade, with more than 2,600 hospitals and over 50,000 contract pharmacies now participating nationwide. The GAO found that many covered entities fail to demonstrate that the savings are used to reduce costs for patients or to expand access to care for vulnerable populations. The Mackinac Center cited this finding as evidence that the 340B program has expanded beyond its intended scope, creating a parallel revenue system for hospitals while reducing transparency and accountability within the healthcare market.
Jarrett Skorup, Director of Marketing and Communications at the Mackinac Center, said that claims by hospitals regarding the use of 340B profits for patient care are "dubious" due to the absence of federal reporting standards. Skorup explained that hospitals and contract pharmacies can freely use the excess revenue generated through 340B sales without proving that the funds benefit patients directly. He emphasized that meaningful reform should include greater oversight, reporting requirements, and transparency to ensure that the billions in annual 340B discounts are reinvested in patient care rather than absorbed by hospital administrative costs.
According to its official website, the Mackinac Center for Public Policy is a Michigan-based nonprofit research and educational institute founded in 1987 that advocates for free-market principles, limited government, and individual liberty. The organization produces policy research, publishes commentary, and provides legislative analysis on topics including healthcare reform, taxation, and economic growth. Through its advocacy work and independent research, the Mackinac Center seeks to inform policymakers and the public about how market-driven solutions can create more accountable and efficient governance.
