Putting 340B Program Growth in Context

Recent data released by the Health Resources and Services Administration show that drug purchases made under the 340B Drug Pricing Program totaled $81.4 billion in 2024.¹ Of these purchases, 340B hospitals accounted for nearly 87% or approximately $71 billion. It is important to put these numbers in perspective. When appropriately contextualized, this data is evidence that the 340B program is one of the most consequential policy solutions to address high and rising drug prices, as well as ensure that drug companies contribute to the health care safety net in communities across this country.

Since its inception over three decades ago, the 340B program has expanded due to policy, market and technological forces. Congress, on a bipartisan basis, broadened the reach of the program several times to assist some of the most underserved populations in our country, including children, cancer patients, and the approximately 20% of Americans who live in rural communities.

Moreover, the scope of 340B is directly tied to the prices that drug companies set for their products. Therefore, the more drug companies charge for the drugs, the larger the 340B discount, which translates into greater growth in the program. In addition, because 340B discounts only apply to outpatient drugs, the program has grown due to advances in technology and medical training that have made higher complexity care safer to do on an outpatient basis, as well as public and private payer policies that have driven more care into the outpatient setting.

Of these forces, nothing is more consequential to growth in the 340B program than the high prices drug companies charge for both new and older drugs. For example, the median launch price for new drugs entering the market was $370,000 in 2024, up from $300,000 in 2023^.2 Put another way, growth in the median launch price between 2023 and 2024 was 23%, the same growth rate the 340B program experienced in that timeframe. This perfect correlation between launch price and growth rate underscores the direct influence that drug companies’ pricing decisions have on the 340B program.

And these are not rarely used drugs. High-cost specialty drugs are frequently considered the gold standard for treatment of chronic conditions such as cancer, rheumatoid arthritis and hemophilia. In 2024, these drugs accounted for over half (51.7%) of all U.S. prescription drug expenditures³, and the specialty drug market grew by nearly 12% between 2023 and 2024. This trend is expected to continue as the specialty drug market is projected to grow to $1 trillion by 2030.⁴

While science and technology have expanded the ability to safely care for more people in the outpatient setting, this trend has been accelerated by policy decisions and market forces. Specifically, the Centers for Medicare & Medicaid Services has routinely expanded the list of procedures approved for payment in the outpatient and ambulatory surgery center settings, including via telehealth, and commercial payers also have increasingly steered patients to lower cost outpatient sites of care. As a result, hospital outpatient volumes have increased significantly. According to data from Kaufman Hall, hospital outpatient volumes rose by nearly 5% between 2023 and 2024 and 7.2% when compared to 2022.⁵ These shifts will likely continue as CMS has begun a process to eliminate the agency’s inpatient-only list.

Although the 340B program has certainly grown over time, this growth should not be misinterpreted. Hospitals have an obligation to care for anyone who presents at their doors regardless of ability to pay, while also striving to meet community benefit requirements in a variety of ways. However, the 340B program is the primary way drug companies financially contribute to the social safety net, giving back some of the immense financial benefits they have received from federal programs like National Institutes of Health-funded research.

In 2022 alone, 340B hospitals provided nearly $100 billion in community benefits, which included the provision of free or reduced cost care and medications, as well as community building activities such as free clinics, complimentary health screenings and community education on reducing the incidence of chronic disease.⁶ These innumerable benefits have helped to improve the health and well-being of Americans across the country. 

Drug companies’ contribution of just a small fraction of their approximately $1.7 trillion in revenue in 2024 is critically important in hospitals’ ability to provide these benefits. We urge policymakers to protect and preserve the 340B program so it can continue to allow eligible providers to stretch their scarce resources, reach more patients and provide more comprehensive services.