The PhRMA announced that the 340B program contributes to higher prescription costs for patients in the U.S. The announcement was made on X.
According to a blog by PhRMA, the 340B Drug Pricing Program allows certain large, tax-exempt hospitals to acquire outpatient prescription medicines at extremely low prices, sometimes “as little as a penny” per dose, while still billing insurers or patients at the full, non-discounted rates. This practice has led to significant markups, with hospitals reportedly reselling these discounted drugs at “thousands of dollars” above the acquisition price, shifting extra costs to private insurers and patients through higher insurance premiums and out-of-pocket expenses. The policy issue arises because hospitals are permitted to charge either the full chargemaster rate or negotiated reimbursement, regardless of the deep discounts received through 340 B.
According to the Government Accountability Office, hospitals participating in the 340B program can reinvest savings into services such as medication assistance, expanded care access, and community outreach. However, there is no federal requirement that hospitals report how they use 340B revenue. This lack of transparency has raised concerns over whether savings are consistently used to benefit low-income patients.
According to a report from PhRMA, California’s 340B program has seen significant growth, with hospitals in the state 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 the program’s alignment with its original intent.
PhRMA (the Pharmaceutical Research and Manufacturers of America) is a U.S. trade group representing leading biopharmaceutical and drug innovation companies. The organization is active in policy advocacy, supporting measures that aim to balance patient affordability with the need to incentivize drug research and development, and has been a vocal proponent for reforms to the 340B program to increase transparency and prevent unintended financial exploitation by hospitals. PhRMA regularly publishes research, analysis, and commentary on pharmaceutical pricing and health care system costs.
