Adam J. Fein, President of the Drug Channels Institute, said on X that 340B hospitals continue to earn substantially higher margins on specialty drugs than non-340B hospitals and that the program lacks transparency about how profits are used.
"A new analysis from Milliman Insight finds that 340B hospitals continue to earn substantially higher margins on specialty drugs than non-340B hospitals," said J Fein. "340B hospitals received higher reimbursements for autoimmune drugs than with non-340B hospitals. For 16 drugs, estimated 340B profit margins ranged from 167% to an outrageous 180,721%–far above margins at non-340B hospitals. Despite these windfall gains, no one knows where the 340B profits go, or which patients benefit, or whether the funds are being used properly."
According to a Milliman analysis of price transparency data from 25 hospitals, including 13 in the 340B program, contracted reimbursement at 340B hospitals was approximately eight percentage points higher than at non-340B hospitals for ten physician-administered autoimmune drugs. For sixteen drugs examined, estimated 340B profit margins ranged widely, from 167% up to more than 180,000%, significantly exceeding margins at non-340B sites. The data underscore a substantial gap between what hospitals pay for these drugs and what insurers reimburse.
Congress established the 340B Drug Pricing Program in 1992, mandating drugmakers participating in Medicaid to offer discounted outpatient medicines to eligible "covered entities." The program is administered by the Health Resources and Services Administration (HRSA) and aims to help hospitals stretch limited resources. However, the Government Accountability Office (GAO) has repeatedly highlighted risks such as duplicate discounts and oversight gaps with contract pharmacies, calling for stronger supervision.
The Congressional Budget Office (CBO) found that 340B discounted drug purchases increased from $6.6 billion in 2010 to $43.9 billion in 2021. This growth is partly attributed to hospitals purchasing more drugs and opening off-site outpatient departments qualifying for 340B pricing. The CBO notes that the program can incentivize hospitals to administer higher-priced drugs since insurers reimburse above acquisition cost, thereby boosting provider margins without necessarily offering clear patient benefits.
Fein is also the author of the Drug Channels blog, a long-standing publication focused on pharmaceutical economics and drug distribution. Drug Channels claims it provides analysis to a broad cross-industry audience with over 100,000 subscribers and followers. Fein's work is frequently cited by media outlets, academics, and government reports covering topics related to the 340B program and reimbursement dynamics.
