Pharmaceutical Research and Manufacturers of America (PhRMA) announced that U.S. drug prices are higher due to 340B hospital markups and pharmacy benefit manager middlemen. The announcement was made on the social media platform X.
The 340B Drug Pricing Program, established in 1992, mandates drug manufacturers to offer outpatient drugs to eligible healthcare organizations at significantly reduced prices. While its goal is to support safety-net providers, critics argue that some hospitals may profit by reselling discounted drugs at higher prices. A 2023 Government Accountability Office report called for increased transparency and oversight in the program.
A study conducted by the RAND Corporation in 2021 found that U.S. prescription drug prices were, on average, 2.56 times higher than those in 32 other countries. The disparity was more pronounced for brand-name drugs, which were priced 3.44 times higher in the U.S. than the international average. This analysis was based on drug pricing data from 2018.
According to PhRMA, California’s 340B program features over 3,500 contracts between hospitals and pharmacies as of 2025, with about 40% involving out-of-state partners. This pattern of contracting has raised questions about adherence to the program’s intent. The growth reflects how hospitals navigate complex pharmacy arrangements under the program.
PhRMA represents leading innovative biopharmaceutical research companies in the U.S., whose members are responsible for most new drug development globally. The organization advocates for public policies that encourage medical innovation and patient access. Its member companies invested an estimated $100 billion in research and development in 2022.
