Big tax-exempt hospitals and clinics abuse a little-known federal program to charge huge markups on medicines, sometimes up to 7x or more, to boost their profits, while they pass the bill to patients, taxpayers and employers through higher drug costs.

They get away with this by exploiting, sometimes illegally, the 340B hospital markup program. This government program was created in 1992 to help patients access more affordable medicines. Today, the 340B program has become less about patients and more about boosting the bottom lines of hospitals and for-profit pharmacies.

Here’s how.

The 340B program allows hospitals and clinics to buy medicines at steep discounts and charge patients whatever they want, with the expectation that savings will help uninsured and low-income patients afford the care they need. Unfortunately, this often doesn’t happen.

Without oversight, 340B has strayed far from its safety net purpose to a profit engine for hospitals, PBMs, private equity firms, and big chain pharmacies. These entities exploit loopholes to maximize profits, while patients, taxpayers, and employers bear the hidden costs through inflated drug prices.

Profits from 340B markups now account for nearly $65 billion – 10% of brand medicine spending – and continue to grow unchecked. Worse, hospitals can charge full price to vulnerable patients, burying them in medical debt if they can’t pay.

When hospitals have free reign mark up medicines, everyone pays the price. It’s time for transparency and accountability to stop this greedy behavior.

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