Pete Sepp, president of the National Taxpayers Union, said the federal 340B drug discount program offers "all kinds of perverse incentives" in the health care system.
Medicare accounted for $57 billion in improper payments in fiscal year 2025, while Medicaid added another $37 billion; improper federal payments totaled $186 billion that year across 64 programs, according to a Government Accountability Office report.
Nationally, 340B drug purchases have grown from $5 billion in 2010 to $81.4 billion in 2024—a more than sixteen-fold increase—driven largely by an expansion of eligible hospitals under the Affordable Care Act and a surge in contract pharmacy arrangements, according to the Paragon Health Institute.
A 2025 Federal Trade Commission report found that the top three pharmacy benefit managers marked up numerous specialty generic drugs by hundreds to thousands of percent at their affiliated pharmacies, generating more than $7.3 billion in revenue above estimated drug acquisition costs from 2017 to 2022. The Big Three also generated an additional $1.4 billion through spread pricing by billing plan sponsors more than they reimbursed pharmacies for the same drugs, according to the Federal Trade Commission.
Sepp has served as president of the National Taxpayers Union since 2014 and has worked with the organization since 1988. The NTU is a nonpartisan citizen group founded in 1969 focused on lower taxes and government accountability, according to NTU.
