WSJ Editorial Board says 340B program has been exploited following North Dakota ruling

The Wall Street Journal Editorial Board said on May 7 that a federal court ruling blocking North Dakota’s 340B drug-pricing law highlights broader concerns about how the program is being used, arguing that hospitals and pharmacies have benefited from it at the expense of drugmakers and patients.

In its commentary on the court ruling, the editorial board said the decision reflects concerns that the program has been exploited by hospitals and pharmacies at the expense of drugmakers and patients.

The 340B Drug Pricing Program requires drug manufacturers to sell outpatient drugs at discounted prices to eligible safety-net hospitals and clinics. It was created to help providers serving low-income and uninsured patients stretch limited resources, but it does not require that discounts be passed directly to patients or that savings be used for specific services, according to JAMA Health Forum, which has examined concerns about transparency, program growth, and contract pharmacy expansion.

Federal oversight gaps have also been raised in connection with program compliance. 

The U.S. Government Accountability Office (GAO) has found that audits do not fully test whether covered entities prevent duplicate discounts, that audit closures do not ensure all noncompliance has been corrected, and that oversight does not fully verify eligibility requirements such as diversion and Medicaid rebate compliance.

Covered entities purchased $81.4 billion in outpatient drugs through the 340B program in 2024. Disproportionate share hospitals accounted for $64.1 billion of those purchases, while children’s hospitals accounted for $3.3 billion and critical access hospitals accounted for $2.7 billion, according to the Health Resources & Services Administration. 

The GAO has also reported a sharp expansion in contract pharmacy arrangements, rising from about 1,300 pharmacies in 2010 to nearly 20,000 in 2017, which allow covered entities to dispense drugs through outside pharmacies and generate revenue when reimbursements exceed acquisition costs.

The Wall Street Journal Editorial Board writes opinion editorials under a stated philosophy of free markets and free people. WSJ Opinion describes its editorials as fact-based opinion, with editorial writers conducting their own reporting and presenting views consistent with that philosophy while operating separately from the newsroom.