According to the Government Accountability Office (GAO), the 340B discount prescription drug program was designed to help health care entities that “provide care to low-income, medically underserved individuals.” Today, the program is being misused to cover individuals who do not need discounts in order to drive profits for big hospital systems.
Evidence of the 340B profitability for major non-profit hospital systems is the program’s rapid rate of expansion into new health care settings in recent years. Since 2010, the Congressional Budget Office (CBO) reported a 19% annual increase in the program. Over that same period, the poverty rate in the United States has fallen significantly. By all rights, a program that was designed to help underserved communities and low-income patients should not be growing rapidly while poverty is declining. Clearly something is wrong and the system is being abused.
The Staggering One-Year Growth of 340B Program
Between 2023 and 2024, drug purchases under the 340B program grew by $15.1 billion, from $66.3 billion to $81.4 billion. Looking further into the estimated proportional share of each state’s 340B growth shows that purchases under the program were increasing in a dozen states by more than $1 million per day. In California alone, 340B purchases increased by more than $4.7 million per day in 2024.
The facts show that these purchases were not being expanded to keep up with the low-income population growth in states, but rather to maximize profits for non-profit hospitals. As a result, drug prices are going up, and the 340B program is covering people who were never intended to be a part of the system. Congress must take action and make reforms to this system immediately in order to help lower the cost of prescription drugs.
The table below demonstrates how fast the 340B system grew in each state in 2024. The data attributes an equal proportion of 340B purchase increases in the U.S. to that state’s proportion of the country’s population. Based on these estimates, many states across the country were expanding 340B program purchases by millions of dollars every day. The evidence makes it clear the 340B drug purchase growth is not directly correlated to the number of underserved individuals in a state as the program was intended.
Misuse of the 340B program means big profits for wealthy non-profit hospital systems all around the country. Unfortunately, it also means higher drug prices for American consumers because hospital systems collect the difference between the price of a drug and the discount price. The savings is not passed onto the patient which incentivizes higher cost drugs. With no reform in sight, hospitals are expanding the system as fast as possible, pocketing the profits while driving up costs for patients.
2025 Update
The latest federal data confirms the 340B program’s growth has not slowed. 340B drug purchases reached $100 billion in calendar year 2025, a nearly $19 billion increase from the $81.4 billion reported in 2024. That single-year jump represents nearly $51 million in new 340B spending every day. Disproportionate Share Hospitals alone accounted for $79.2 billion of the total, underscoring how the program has become concentrated in large hospital systems rather than the safety-net clinics it was designed to serve. The top ten drugs purchased under the program represented 28.6% of all spending. HRSA notes that the specialty pharmaceuticals, while accounting for only 38% of units purchased, drove 61.9% of total 340B spending. The program has grown so large that its purchases represent more than 11% of all U.S. payer net spending on prescription drugs.
Sources:
HRSA (2025 Purchases): https://www.hrsa.gov/opa/updates/2025-340b-covered-entity-purchases
HRSA (2024 Purchases): https://www.hrsa.gov/opa/updates/2024-340b-covered-entity-purchases
HRSA (2023 Purchases): https://www.hrsa.gov/opa/updates/2023-340b-covered-entity-purchases
State populations numbers are from Census (Vintage 2025, 2025 Estimates): https://www.census.gov/data/tables/time-series/demo/popest/2020s-state-total.html#v2025