Dutch Rojas, founder of Bliksem Health, said on May 10 that the federal 340B drug pricing program has shifted away from its original safety-net purpose and now allows hospitals to buy discounted drugs while billing insurers at higher rates.
“340B was sold to America as a safety net for indigent care,” Rojas said in a social media post. “It became the largest unregulated subsidy in healthcare. Hospitals buy drugs at a 30 to 50 percent discount and bill commercial insurance at full price. The arbitrage funds executive compensation, building campaigns, and acquisitions of independent physician practices. There is no requirement that a single dollar reach a low-income patient.”
The 340B program requires drug manufacturers to sell outpatient drugs at discounted prices to eligible safety-net hospitals and clinics. It was designed to support providers serving low-income and uninsured patients, but does not require discounts or savings to be passed directly to patients or used for specific services, according to JAMA Health Forum.
The Government Accountability Office (GAO) has flagged ongoing oversight gaps in the program, including issues related to duplicate discounts, drug diversion, eligibility verification, and audit processes overseen by the Health Resources & Services Administration.
In 2024, covered entities purchased $81.4 billion in outpatient drugs through 340B. Disproportionate Share Hospitals accounted for $64.1 billion of that total, followed by Health Center Programs at $4.7 billion and Children’s Hospitals at $2.4 billion, according to the Health Resources & Services Administration.
Federal data also show the number of 340B covered entity sites has more than doubled since 2013. GAO reports that only five of 20 prior recommendations have been fully implemented, with remaining concerns including audit closure procedures, duplicate discount prevention, and eligibility enforcement.
Dutch Rojas is the founder of Bliksem Health and Physician Capital and has launched five healthcare startups. His career includes founding Sano Surgery in 2012 to create transparency in surgical care pricing and co-founding Everyone Health in 2019, with both companies later acquired. He joined the Physician-Led Healthcare for America board in 2024.
