Sally Pipes, President and CEO of Pacific Research Institute, said on Feb. 23, 2026, that the 340B Drug Pricing Program is being widely exploited by hospitals, resulting in patients bearing the financial burden. According to Pipes in a statement published by Newsmax, "Congress created 340B to help safety-net hospitals stretch scarce resources. Drug manufacturers are required to sell medicines to participating hospitals at steep discounts, with the expectation that hospitals would use the savings to expand care for low-income and uninsured patients... But the law does not require hospitals to pass those discounts on to patients. Instead, many hospitals buy drugs at the discounted 340B price, bill insurers at full price, and pocket the difference... What are hospitals doing with all that money? In many cases, they're investing it for their own financial gain... Many of those hospital sites look nothing like traditional safety-net providers. According to one analysis, 69% of 340B hospitals provide below-average levels of charity care... Patients ultimately pay the price."
The issue matters because while Congress intended for the program to support vulnerable populations through discounted drug prices at safety-net facilities, there is no statutory requirement for these savings to be passed directly to patients. According to Newsmax, this structural gap allows covered entities such as hospitals to capture savings while patients can still face full cost-sharing responsibilities.
A U.S. Senate Health, Education, Labor and Pensions (HELP) Committee majority staff report found that Bon Secours Richmond Community Hospital’s total "340B benefit" from September 2018 through September 2023 was $276.5 million—including $44.4 million in revenue from self-administered drugs—demonstrating how significant these financial gains can be for some institutions.
The Congressional Budget Office reported that the program increases federal costs by encouraging more prescriptions of expensive drugs and reducing rebates without evidence of direct patient benefits. Hospitals profit from this dynamic and it has spurred mergers that raise healthcare expenses overall—a trend which burdens taxpayers without improving access.
The Medicare Payment Advisory Commission has also raised concerns about transparency and incentives within the program; it noted that Medicare pays higher rates to participating hospitals but found no evidence of improved patient access or outcomes.
Pipes leads research and advocacy on healthcare policy at Pacific Research Institute—a Pasadena-based organization founded in 1979—which promotes free-market solutions according to its website.
