340B Program Is Driving Up Costs and Needs Urgent Reform | AMCP Annual 2025

The 340B Drug Pricing Program, originally created to provide affordable medications for low-income patients, is finding itself in the hot seat due to its increased expansion and rising costs to employers and state governments.

At the 2025 AMCP annual meeting in Houston from March 31 to April 3, John M. O'Brien, Pharm.D., MPH, president and CEO of the National Pharmaceutical Council (NPC), shared concerns and potential reforms in a conversation with Managed Healthcare Executive.

O’Brien dove deeper into this topic during his session at the meeting titled, “Understanding 340B Stakeholder Perspectives, Litigation Trends, and Reform Prospects.”

In our conversation, he addressed the need for reform, noting alarming trends in program growth and financial impacts.

“I think reforms to the 340B program are urgently needed to rein in the growth, particularly the growth in profiteering of the program," O'Brien said. “This buy low, sell high program is functioning as a drug markup program by hospitals, and I think it’s really moving far away from the original intended purpose of the program.”

He pointed to data showing the program has grown by 50% over the past two years, costing self-insured employers about $5 billion in lost rebates and adding $1 billion in increased costs to state and local governments.

New data from the National Alliance of Healthcare Purchaser Coalitions showed that a 7.5% rise in claims costs at safety-net-owned hospitals has added $36 billion in spending.

“Many people think that this is a victimless crime,” he said, “but the data is starting to show that employers are starting to become affected.”

When asked about the legal and regulatory challenges facing the 340B program, O’Brien said that as a pharmacist, he believes that prescription medicines are “something that help people get well, stay healthy and avoid higher cost care settings.”

While 340B is a key program in managing drug costs, he added, it's part of a bigger system that often prioritizes financial margins over patient care.

“It’s not just 340B,” he said. “When I think about prescription drug affordability boards, commercial gross-to-net spread, I think all of these things function in a way that isn’t necessarily helping patients. If we keep taking little cuts out of this industry, we have the potential to hit an artery.”

O'Brien also pointed out that the program doesn’t work the same way everywhere.

Research from NPC found that hospitals in wealthier areas are more likely to raise drug prices—potentially hurting those who need help the most.

Regarding rural healthcare, O'Brien discussed the importance of 340B to safety-net providers.

“As someone who takes their own mom to a federally qualified health center for her routine care, I understand how important this program is to underserved areas, particularly rural, underserved areas,” he said.

However, he warned that unchecked growth could lead to higher costs, even in those states.

“I believe it was IQVIA that did some recent work that found that the state of South Dakota, employers in that state may be spending $57 million more because of the 340B program,” O’Brien said. “The new legislation that was passed has a potential to increase that higher spending to about $80 million.”

He concluded by saying he thinks all states, not only South Dakota, should be having a serious conversation about the 340B program and how it's working in their state.