CBO Report Confirms 340B Fuels Hospital Consolidation and Higher Costs

WASHINGTON, D.C. – Following the release of today’s Congressional Budget Office (CBO) report on the 340B Drug Pricing Program, Community Action for Responsible Hospitals (CARH) said the findings confirm that 340B is fueling the corporatization of American healthcare, driving up costs for taxpayers and patients while enriching large hospital systems and their Wall Street partners.

The report shows that corporate hospital giants are using 340B as a profit engine while patients and communities see little benefit. Instead of lowering costs, 340B has fueled hospital takeovers of community clinics, driven prescribing of higher-cost drugs, and allowed big systems to exploit loopholes for billions in revenue. This is not what Congress intended, and it’s time for reform to ensure patients – not hospital executives – are 340B’s beneficiaries.

Key Findings from CBO’s Report:

• Federal Spending Spirals: CBO confirmed that 340B drives up federal costs by encouraging hospitals to prescribe more drugs, pick higher-priced drugs, cut into rebates, and expand services in ways that pad their bottom line. These tactics push up both Medicare and Medicaid costs and inflate expenses for employer health plans.

• Medicaid Costs on the Rise: The 340B program isn’t saving Medicaid money – it’s costing state budgets more. In Minnesota, 340B facilities pocketed 42 cents in profit for every dollar of retail drug reimbursement. And in many cases Medicaid loses out on rebates it would normally collect, meaning taxpayers pay more.

• Wall Street–Style Consolidation: Hospital empires are using 340B to swallow up clinics and expand their reach. By 2021, 75% of 340B hospitals had at least one off-site clinic – averaging 11 each – and those clinics made up over 50% of all 340B facilities. Between 2013 and 2021, the number of off-site clinics in 340B skyrocketed from 6,100 to  27,700, cementing corporate hospital control.

• Cancer Drug Gold Rush: Cancer therapies made up a 20 percentage-point larger share of 340B spending than the overall market average, and spending on cancer drugs in 340B grew 8.6-fold between 2010 and 2021 – nearly triple the market wide growth rate. This shows hospitals are chasing margins, not affordability for patients.

CARH’s own research backs up CBO’s warning. Disproportionate Share Hospitals that joined 340B between 2016 and 2017 cut spending on free or reduced-cost care by 22% on average, even as they boosted their financial investments by 89% in just five years. These hospitals are using 340B as a launchpad for Wall Street–style portfolio growth not patient care.

Congress must act. It’s time to demand transparency, accountability, and guardrails that stop big hospitals from exploiting the 340B program as a Wall Street profit center.