By Sally Pipes
Monday, 10 November 2025 10:35 AM EST
Members of the Senate Health, Education, Labor, and Pensions Committee convened a hearing in October to address the urgent need for reform of the 340B Drug Pricing Program, a policy designed to expand access to affordable medicines for low-income populations but now plagued by systemic abuse.
Initially intended to benefit hospitals serving disadvantaged communities, the program has evolved into a mechanism for profit generation, with covered entities—hospitals and clinics eligible for discounted medications—selling these drugs at significant markups to insurers while failing to reinvest savings into patient care. A recent investigation led by Senator Bill Cassidy, R-La., revealed that major healthcare systems like the Cleveland Clinic and Bon Secours Mercy Health do not pass 340B discounts directly to patients, instead using the program as a financial lifeline.
The expansion of 340B has surged dramatically, with participation growing from approximately 50 hospitals in its first year to over 2,600 today. Spending under the program has skyrocketed from $6.6 billion in 2010 to $43.9 billion in 2021, according to the Congressional Budget Office, while independent analyses estimate the value of discounts at $70 billion in 2023. This has resulted in lost federal tax revenue, with estimates suggesting a $200 billion shortfall over the next decade.
Critics highlight that many covered entities do not meet the program’s core requirements, including serving low-income populations. A 2019 Government Accountability Office report warned of inadequate oversight, noting that auditors lacked sufficient processes to verify hospital eligibility. Additionally, only 35% of 340B hospitals are located in medically underserved areas, and many provide less charity care than the average hospital.
The program’s growth has also fueled healthcare consolidation, as 340B hospitals acquire clinics and facilities, further reducing competition and driving up costs for patients. Advocates argue that a policy meant to aid vulnerable communities has instead become a financial boon for well-resourced institutions, undermining its original purpose.
With Republicans shaping their end-of-year legislative agenda, experts urge prioritizing reforms to restore accountability and ensure the 340B Program fulfills its intended mission.
