Eliza Maciag, Senior Manager on PhRMA’s Public Affairs team, said 340B’s rapid expansion stems from hospitals’ profit-seeking behavior and is increasing costs without clear patient benefit.
"Big hospitals are once again attempting to evade accountability for their role in driving dramatic increases in the size of the 340B program, which costs patients and taxpayers billions each year," said Maciag. "Until we fix 340B, big tax-exempt hospitals and clinics will continue to exploit the program, increasing costs for patients, employers and taxpayers. Data shows that 340B entities are purchasing more medicines at the 340B price, which can be as low as a penny, and then they can mark them up by thousands of dollars or more. Drug spending is nearly 200% higher per patient at 340B hospitals compared to non-340B hospitals."
According to IQVIA, the 340B program reached $124.1 billion in 2023 at wholesale acquisition cost, marking a continued multiyear increase. Factors such as state laws limiting manufacturer contract-pharmacy restrictions and court rulings potentially expanding eligibility may further accelerate this growth. The scale of the program has led policymakers and analysts to question whether its growth reflects patient needs or hospital revenue strategies rather than solely drug price trends.
A Berkeley Research Group analysis estimates that the 340B program costs taxpayers approximately $13.4 billion annually in lost Medicare rebates. Purchases at 340B prices displace rebates intended to reduce federal spending. As more hospitals utilize the 340B program for prescriptions, rebate recovery declines, leading to increased Medicare costs nationwide. The report underscores how hospital-focused use of the program can elevate public spending independently of drug list prices.
A 2015 Government Accountability Office (GAO) analysis of Medicare claims found that per-beneficiary Part B drug spending was significantly higher at 340B disproportionate-share hospitals (DSH) compared to non-340B hospitals. In 2012, average outpatient drug spending at 340B DSH hospitals was $144 per beneficiary, whereas it was $60 at non-340B DSH hospitals and $62 at other non-340B hospitals—approximately 140% higher. The GAO noted these differences persisted even after adjusting for teaching status and patient risk.
Maciag focuses on issues related to the 340B program, pharmacy benefit managers (PBMs), and the cost and value of medicines in her role at PhRMA. Her background includes rapid-response and grassroots communications at the Investment Company Institute. PhRMA represents leading biopharmaceutical research companies and advocates policies aimed at expanding access and affordability while supporting medical innovation—contextualizing her analysis of the 340B program.
