Ken DeGraaf, a U.S. Representative from Colorado, expressed concerns regarding the 340B Drug Pricing Program's pricing structure. He said that it forces drug manufacturers to offset heavy discounts while many participating providers offer less uncompensated care and use profits to acquire others. This statement was made on the social media platform X.
"Medicaid 340b pricing demands a 60% discount for some providers to compensate for un-reimbursed care, meaning mfg's need to charge 250% to cover costs," said DeGraaf. "Ironically, the 340b providers statistically provide less unreimbursed care; and are using the profits to purchase those that do. Don't ask ‘who builds those massive pharma-C-suites,' they're built by you."
Established in 1992 and administered by the U.S. Health Resources and Services Administration (HRSA), the 340B Drug Pricing Program aims to help healthcare providers stretch limited resources to serve vulnerable patients. It allows eligible hospitals and clinics to purchase outpatient drugs at reduced prices, with savings intended to support access to care for low-income and uninsured populations.
According to the Government Accountability Office, hospitals participating in the 340B program can reinvest savings into services such as medication assistance and community outreach. However, there is no federal requirement for hospitals to disclose how 340B revenue is spent, raising concerns over whether the program’s savings consistently benefit low-income patients.
The JAMA Health Forum reported that hospitals involved in the 340B program have been more likely to acquire independent physician practices, leading to an increase in hospital-based outpatient care. This consolidation trend has contributed to higher service costs and shifts in care delivery. Researchers noted that this pattern may have implications for affordability and competition in local healthcare markets.
DeGraaf serves as a U.S. House Representative from Colorado and is a member of the Colorado House of Representatives for District 22. A retired U.S. Air Force pilot and engineer, he earned degrees from the U.S. Air Force Academy and Columbia University. Elected in 2022, DeGraaf serves on both the Energy and Environment Committee and the Transportation, Housing & Local Government Committee.
