The federal 340B drug discount program faces intense scrutiny as annual spending reached $100 billion in 2025. A September 2026 report by the Pioneer Institute and CancerCare alleges participating hospitals lag behind non-340B peers in charity care, prompting pushback from the American Hospital Association. Meanwhile, lawmakers and regulators propose major reforms, including the Senate's SUSTAIN 340B Act and a January 2027 rebate pilot, amid legal battles over contract pharmacies and patient definitions.
Charity care report
- ▪A report by the Pioneer Institute and CancerCare released on September 24, 2026, found 340B hospitals spent 2.16% of operating expenses on charity care (1.6% for uninsured patients), compared to 2.82% (2.26% for uninsured) at non-340B hospitals.
- ▪The Pioneer Institute and CancerCare report called for greater transparency, auditable revenue reporting, and requiring 340B hospitals to provide more charity care than non-340B hospitals.
Disputes over hospital charity care and assets
- ▪The American Hospital Association stated that 340B hospitals have provided nearly $100 billion in total community benefits, including charity care, behavioral health clinics, and free or discounted drugs.
- ▪A HEAL Collaborative analysis released in March 2026 found that 340B hospital assets grew nearly 40% from 2014 to 2022, while uncompensated care per bed fell 15%.
Congressional reform proposals
- ▪The United States House of Representatives' SECURE 340B Act, introduced on July 6, 2026, proposes pausing the manufacturer rebate model for four years while implementing a new patient definition and contract-pharmacy standards.
- ▪The United States Senate's SUSTAIN 340B Act, introduced on August 5, 2026, proposes establishing a statutory patient definition, ending the rebate pilot program within one year, and transitioning to an independent data clearinghouse.
Proposed CMS changes
- ▪HHS is reportedly considering transferring 340B program oversight from the Health Resources and Services Administration to the Centers for Medicare & Medicaid Services by the end of September 2026.
- ▪The Centers for Medicare & Medicaid Services proposed cutting 340B Medicare reimbursement to average sales price minus 33.4%, which is projected to reduce Original Medicare drug payments by $4.55 billion in the first year.
Federal regulatory actions and audits
- ▪A 2023 Government Accountability Office review of 53 hospitals receiving COVID-19 eligibility exceptions found duplicate discounts were the most common issue audited by the Health Resources and Services Administration.
- ▪The Health Resources and Services Administration scheduled a 340B rebate pilot program for January 2027 covering approximately 25 drugs, which hospital groups project will have an annual cash-flow impact exceeding $1 billion.
Contract pharmacy access and fees
- ▪Josh Weber of health-system pharmacy argued at the National Association of Specialty Pharmacy 2026 conference that contract pharmacy networks are not linked to patient benefits and carry dispensing fees of $1,000 to $2,000 per transaction.
- ▪In February 2026, the Fifth Circuit Court of Appeals unanimously upheld Louisiana's contract-pharmacy access law against challenges from AbbVie, PhRMA, and AstraZeneca.
Overview and growth of the 340B program
- ▪Hospitals and outpatient facilities purchased $100 billion worth of drugs through the 340B drug discount program in 2025, representing an increase of approximately 22% to 23% from the prior year.
- ▪The 340B drug discount program, created by Congress in 1992, allows safety-net healthcare providers to purchase outpatient drugs at discounts of 25% to 50% from drug manufacturers.
Debatable claims
- ▪A strict, time-bound patient definition is necessary for the 340B program
- ▪Charity care spending is an inadequate measure of 340B hospitals' community benefits
- ▪Congress should require 340B hospitals to provide more charity care than non-340B hospitals
- ▪The HRSA's 340B rebate pilot program does more harm than good
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