Neal Masia, adjunct professor of business and economics at Columbia University, said on March 25 that recent research indicates the expansion of the 340B Drug Pricing Program is being driven primarily by large teaching hospitals rather than smaller community-based providers.
The 340B program was created to help eligible safety-net providers stretch federal resources and serve more patients, but its financial footprint has expanded significantly. Covered entities bought $81.4 billion in outpatient drugs through the program in calendar year 2024, according to the Health Resources & Services Administration. That makes 340B one of the largest federal drug-purchasing channels — and raises questions about who benefits from it.
"Participating entities purchased $81.4 billion in medicines in 2024, a 23% increase over the previous year and a whopping twelve times the size of the program in 2010. The growth begs the question – where are the tens of billions of dollars generated by this program coming from, and where are they going? Effectively, 340B has become a drug mark-up program. Hospitals buy drugs at low cost and sell them high – and are incentivized to do so as often as possible," Masia said, according to RealClearHealth.
Masia also said that "340B is not correlated with a positive impact on charity care. More than half of 340B hospital systems have rates of charity care below the national average of 2.15% of operating expenses. There are no limitations on how hospitals use the money they reap from 340B and no reporting requirements."
Large hospital systems can use the structure of the 340B program to expand revenue by adding off-campus treatment locations and building contract pharmacy networks that reach insured patients across wider geographic areas. That scale allows them to capture more prescription volume, creating competitive pressures for smaller hospitals and clinics, according to RealClearHealth.
Federal watchdogs have found that oversight of 340B remains incomplete even after years of recommendations. The Government Accountability Office testified in late 2025 that HRSA had implemented only five out of 20 GAO recommendations tied to the program, leaving unresolved weaknesses involving contract pharmacies, hospital eligibility, and interactions between 340B discounts and Medicaid rebates.
The overlap with Medicaid continues to pose a risk of duplicate discounts, where manufacturers may be required to provide both a 340B discount and a Medicaid rebate on the same drug. However, data limitations and oversight gaps have made enforcement inconsistent despite statutory prohibitions, according to GAO.
Neal Masia, a health economist, is an adjunct professor at Columbia Business School and has held roles in academia, industry, and policy. He previously spent nearly 18 years at Pfizer, including as chief economist and vice president of patient and health impact, and has also worked at the Congressional Budget Office.
