Ryan Long, senior research fellow at the Paragon Health Institute, said on May 18 that he agrees 340B reform should better target assistance toward safety-net hospitals rather than large hospital systems, and called for eliminating the program’s current “buy low, sell high” structure.
“If we want a 340B program that directs assistance to safety net hospitals rather than wealthy hospital systems we need to eliminate the ‘buy low sell high’ drug arbitrage the current program is built on,” Long said on social media.
The 340B Drug Pricing Program has drawn increased attention as policymakers and analysts debate how federal drug discounts are distributed. The program allows eligible hospitals and federal grantees to purchase outpatient drugs at reduced prices in order to stretch federal resources, serve more eligible patients and expand services, according to the Health Resources and Services Administration. Eligible covered entities include hospitals and other health care organizations defined by statute.
Under the program’s structure, covered entities may retain the difference between a drug’s discounted acquisition cost and the reimbursement paid by insurers or patients, a system often described as “buy low, sell high.” According to the Commonwealth Fund, the revenue is intended to support care for low-income and uninsured patients, but hospitals are not required to pass discounts directly to patients at the point of sale.
In calendar year 2024, 340B covered entities purchased $81.4 billion in outpatient drugs, up from $66.3 billion in 2023. Total U.S. prescription drug spending reached $494.9 billion in 2024, with specialty medicines accounting for more than half of overall spending, according to the Health Resources and Services Administration.
The Government Accountability Office reports that the number of participating covered entity sites has more than doubled since 2013. Manufacturers are required by law to offer discounted outpatient drugs as a condition of Medicaid coverage of their products.
Ryan Long is Director of Congressional Relations and a Senior Research Fellow at Paragon Health Institute, where his role includes communicating Paragon’s research and proposals to Congress, connecting with policymakers and staff, and leading the organization’s health policy education work.
