340B is a Solution, not a Threat to Addressing Health Care Affordability in the U.S.

Many Americans may be unaware that the services they rely on every day through their local hospital are supported by a program called the 340B Drug Pricing Program. Indeed, the discounts on drug purchases authorized under the 340B program directly support increased access to health care services for millions of patients across the country. Not only do these discounts help hospitals provide patients with better access to costly drug therapies, but they also allow hospitals to provide a wide range of services, especially those that are not self-sustaining, such as behavioral health care and labor and delivery. In many cases, these vital services would not exist in these communities if not for the 340B program.

As lawmakers across the political spectrum have long recognized, drug prices in the U.S. are among the highest in the world and continue to grow at an unsustainable pace. A recent Senate report highlights that in 2025 alone, 688 drugs — many used to treat conditions like cancer, depression and asthma — experienced price increases well above general inflation, with several drugs more than doubling in price. Another report found that in just the first two weeks of 2026, nearly 900 drugs experienced price increases. The magnitude of these drug price increases not only have driven up the direct costs of providing care for patients but have made it harder for hospitals to finance uncompensated care for low-income patients while also expanding access to health care services when  demand for health care is high and increasing.

Solving the issue of high and rising drug prices has been the subject of many proposals and administrative efforts, from imposing drug price caps to negotiating prices by the government and setting government-run formularies. But the most effective solution to these problems takes an entirely different approach without using any additional taxpayer or private payer dollars. The 340B program leverages the purchasing power of federal health care programs to incentivize drug companies to offer discounts to hospitals and other providers that serve the nation’s most vulnerable citizens. In doing so, the 340B program serves as an effective solution to three of the nation’s most persistent and bipartisan health care challenges:

1. The 340B program helps keep drug prices lower than they otherwise would be for all stakeholders. One critical but often overlooked aspect of the 340B program is that it includes a disincentive for drug companies to raise prices too high and too fast for all payers. Specifically, if a drug company raises the price of a drug faster than inflation, it owes a bigger discount to 340B providers. This creates downward pressure on prices across the board by acting as a check on drug prices for everyone, not only 340B providers.
2. The 340B program helps lower national expenditures on health care services. 340B dollars are used to maintain, improve and expand access to care in many ways and are tailored to the health care needs of the communities served by the hospital. In some cases, 340B dollars are used to maintain essential service lines that are expensive for the hospital to provide, such as labor and delivery, burn care or cardiology. In other cases, 340B dollars are used to fund important community programs and wraparound services that improve health outcomes and reduce chronic disease burden in the U.S. Examples include diabetes education, medication therapy management, transportation and translation services. Many hospitals also use 340B savings to support the high levels of uncompensated and unreimbursed care they provide to their communities. In total, 340B hospitals spent nearly $100 billion in 2022 alone on community benefits. While all nonprofit hospitals are required by law to provide a certain level of community benefits, providing community benefits to the tune of $100 billion is only possible with the support of the 340B program. If the program were to be scaled back, this amount of investment would be impossible.
3. The 340B program helps protect the safety net for Americans. According to 2023 hospital Medicare cost report data, a staggering 44% of hospitals participating in the 340B program operated with a negative margin. That means these hospitals had costs that far exceeded their revenues. For these hospitals to continue to keep their doors open and serve their communities and most vulnerable patients, the discounts from the 340B program are vital. Many of these hospitals are located in rural areas, and as Health and Human Services Secretary Kennedy rightfully acknowledged, 340B is their lifeblood. Without 340B, we could see more hospitals close their doors and even more communities lose access to health care services, directly putting Americans at risk.

Unfortunately, the program’s success has also made it a target. Multinational drug companies have repeatedly invented new ways to try and diminish the value of the 340B program. Their latest attempts include restricting access to 340B discounts through community pharmacies and undermining three decades of precedent by taking away access to upfront 340B discounts and replacing it with back-end rebates shrouded in massive administrative burden and costs for 340B providers. Simply put, Congress must resist these efforts.

The 340B program was created over 30 years ago with strong bipartisan congressional support and it ought to be preserved in the same manner. We urge Congress to not allow the self-interested needs of the pharmaceutical industry to supplant the needs of patients and communities across this country who rely on the 340B program for access to affordable, high-quality health care every day.