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.