Joe Grogan, former Director of the Domestic Policy Council, said that multiple studies indicate the 340B program increases health care costs by raising the average cost per prescription. This statement was made in a commentary.
“Multiple studies have concluded that 340B raises the costs of health care because participating hospitals are incentivized to maximize profits by prescribing more drugs and the most expensive drugs,” said Grogan. “That’s why the average cost per prescription at a 340B hospital is 150% higher than at a non-340B hospital. Based on 2023 usage data, 340B increased health care costs for state and local governments by $1 billion.”
The 340B Drug Pricing Program, established in 1992, allows eligible hospitals and clinics to purchase outpatient drugs at discounted prices. The program aims to stretch federal resources and provide more comprehensive care. According to the Health Resources and Services Administration, participation has grown significantly, with over 2,500 hospitals enrolled as of 2022.
A 2022 Government Accountability Office (GAO) report found that spending on drugs through the 340B program increased from about $6.9 billion in 2012 to $38 billion in 2021. The report attributes this growth to both the expansion of hospital and clinic participation and the overall increase in prescription drug prices over the past decade. The GAO noted that this rapid increase has raised questions among policymakers about how the program is managed and its broader impact on drug spending and the health care market.
According to a report from PhRMA, California’s 340B program has experienced significant growth, with hospitals maintaining numerous partnerships with pharmacies. As of 2025, there are over 3,500 contracts between 340B hospitals and pharmacies in California, with approximately 40% involving out-of-state pharmacies. This trend has sparked discussions about whether the program aligns with its original intent.
Grogan served as Director of the Domestic Policy Council under President Donald Trump from 2019 to 2020 and previously worked as a health care official in the Office of Management and Budget. He was also a member of the White House Coronavirus Task Force in early 2020.
