Chase Martin, president of the August Strategy Group, said on April 28 that Republicans should support the Trump administration’s effort to reform the federal 340B Drug Pricing Program through a rebate pilot that would require documentation before discounts are paid.
“Trump has repeatedly vowed to ‘cut waste, fraud and abuse everywhere that we can find it.’ Congressional Republicans now have an opportunity to help him achieve that goal by supporting the administration’s efforts to stop hospitals from abusing a little-known federal charity care program (340B)," Martin said in an op-ed published in The Washington Examiner.
"Large hospital conglomerates have used a series of legal loopholes to take advantage of the program by overcharging patients and indirectly shifting costs onto employers and taxpayers. Congress didn’t explicitly require that these providers pass on the savings to patients — so many of them don’t. Many 340B hospitals actually provide far less charity care than they earn from the program. Instead, they’re pocketing the profits. These hospitals aren’t just depriving patients of much-needed discounts. They’re also cheating taxpayers, employers, and the federal government out of billions of dollars,” he added.
The issue has drawn attention amid concerns about transparency in the 340B program and whether savings from discounted drugs are consistently reaching patients.
The 340B Drug Pricing Program requires participating drug manufacturers to sell covered outpatient drugs to eligible hospitals and clinics at discounted ceiling prices. It was designed to help safety-net providers stretch limited resources, expand care to more eligible patients, and offer more comprehensive services. However, it does not broadly require hospitals to pass those discounts directly to patients at the pharmacy counter, according to the Health Resources & Services Administration.
In calendar year 2024, 340B covered entities purchased $81.4 billion in covered outpatient drugs. Disproportionate Share Hospitals accounted for $64.1 billion of that total—about 79% of all program purchases that year, according to HRSA.
A policy change in 2010 allowed participating facilities to contract with an unlimited number of off-site pharmacies. Following that change, contract pharmacy arrangements increased from about 2,000 in 2010 to nearly 130,000 by 2021. Over the same period, prescriptions filled using 340B drugs rose from 18% in 2013 to about 50% by 2020, according to the Congressional Budget Office.
A separate analysis found that among disproportionate share hospitals participating in the program in fiscal year 2021, more than one-third provided charity care equal to less than 1% of total operating costs. The analysis also found that non-340B short-term acute care hospitals provided higher average charity care levels than hospitals participating in the program, and that just one-quarter of 340B hospitals accounted for 80% of all charity care provided within the group, according to Community Voices for Health System Accountability.
Chase Martin is president of August Strategy Group, where he works as a political consultant and legal advisor. His background includes leading national and statewide campaigns, organizing nongovernmental organizations and nonprofits on public policy issues, testifying before legislative committees, developing state and federal legislation, and advising on health care, energy, and telecommunications policy.
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