Paragon Health Institute said on May 20 that Affordable Care Act (ACA) expansion and contract pharmacy policy from the Health Resources and Services Administration (HRSA) have contributed to rapid growth in the federal 340B drug pricing program, and urged policymakers to change how the program’s pricing structure operates.
“340B was supposed to support safety-net care. Instead, ACA expansion and HRSA rulemaking helped ignite explosive contract pharmacy growth—turning 340B into a profit engine for large hospital systems. Policymakers should end the buy-low, bill-high spread,” the organization said in a post on X.
The 340B 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, though it does not require that discounts be passed directly to patients or that savings be used for specific services. Peer-reviewed commentary has raised concerns about program transparency, contract pharmacy expansion, rapid growth, and whether savings consistently translate into measurable patient benefit, according to JAMA Health Forum.
Paragon said hospital participation in the program has expanded significantly, rising from 39 participating hospitals in 1992 to 2,954 in 2024, with much of the growth occurring after the Affordable Care Act broadened eligibility. The group also reported that discounted 340B purchases reached $81.4 billion in 2024, compared with a list-price value of $147.8 billion for the same drugs.
At an October 2025 Senate HELP Committee hearing, Chairman Bill Cassidy said the 340B program had "ballooned with limited oversight," raising questions about how revenue is used and whether it directly benefits low-income patients. Cassidy said program growth is tied to higher health care costs, and pointed to concerns involving contract pharmacies, hospital consolidation, duplicate discounts, and weak transparency requirements.
Paragon Health Institute describes itself as a nonpartisan, not-for-profit health policy research institute focused on reforming government programs and lowering health care costs through patient empowerment, market competition and innovation. Its work spans Medicaid, Medicare, private health insurance, public health, state reform and health care policy research.
Alerts Sign-up