Dive Brief:
- Hospitals and outpatient facilities purchased $100 billion worth of drugs in the 340B discount program in 2025, an almost 23% increase from the year prior as regulators look to reform the program.
- The latest data from the Health and Services Administration, released this week, shows 340B spending has more than doubled since 2021.
- The vast majority of purchases — almost $80 billion — were made by disproportionate share hospitals last year. Regulators said pricey specialty drugs that treat complex, chronic conditions were also making up a larger portion of 340B spending. Although specialty drugs constituted about 38% of purchases, they accounted for almost 62% of total spending last year, according to the data.
Dive Insight:
The 340B program was created in 1992 to make it easier for healthcare facilities that serve a high proportion of low-income or otherwise disadvantaged populations to afford outpatient medicines. Drugmakers are required to sell to qualifying facilities at an upfront discount, and the facilities pocket the difference between the amount reimbursed by insurance.
Hospitals argue the drug discounts provide a much-needed financial cushion for healthcare facilities that have struggled with mounting inflation and other economic issues plaguing the industry.
However, critics allege the 340B program has spiraled out of control in the face of growing spending, which has increased by tens of billions of dollars in recent years.
Hospital consolidation may be one driver of increased spending. Research has suggested the program may incentivize M&A, as hospitals look to acquire more outpatient clinics to reap 340B savings. That consolidation drives higher health spending, as more eligible facilities enter into the program and buy discounted drugs: Over 60,000 entities participate in 340B, a more than 600% increase since 2000, according to a report published last spring from Sen. Bill Cassidy, R-La.
The Trump administration has attempted to reform the 340B program, including through an unsuccessful pilot that would have allowed drugmakers to pay discounts in the form of rebates in response to concerns about fraud and abuse in the program. Regulators tried a new tack this month, proposing to slash Medicare payment for 340B drugs by a third beginning in 2027.
HRSA, which noted that not all 340B drug purchases were included in its annual data, also said an increasing shift from inpatient to outpatient care incentivized 340B drug spending, in addition to industry-wide increases in drug prices.
Oncology, immunology and obesity drugs were the largest drivers of spending growth last year. The top three 340B drugs purchased last year were Keytruda, a cancer drug; Biktarvy, an HIV therapy; and Darzalex Faspro, another cancer drug.
