340B Hit $81 Billion in 2024 (+23%): Why CMS and the IRA Are Poised to Cool the Program’s Runaway Growth

Whoa. The 340B Drug Pricing Program has once again given new meaning to the word “skyrocketing.”

For 2024, discounted purchases under the 340B program reached a record $81.4 billion—an astounding $15.1 billion (+23%) higher than 2023. The gross-to-net difference between list prices and discounted 340B purchases—a proxy for funds available to covered entities—also grew, to $66.4 billion (+$6.0 billion). Hospitals again accounted for 87% of 340B purchases.

How big is the program? 340B purchases are now more than 50% larger than Medicaid’s net prescription drug spending. The program now accounts for nearly one-fifth of the total U.S. gross-to-net bubble.

But thanks to the Inflation Reduction Act (IRA), 340B’s day of reckoning is coming soon. I expect 2026 to be the first year of structural 340B pressure as the Centers for Medicare & Medicaid Services (CMS) continues its regulatory takeover of the 340B program. What’s more, I expect the program’s out-of-control growth rate to slow and for some long-overdue transparency to enter this notoriously opaque program.

Read on for our full analysis—and why the 340B swell may finally be breaking.

SURF'S UP

The Health Resources and Services Administration (HRSA), the agency of the U.S. Department of Health and Human Services that oversees the 340B program through its Office of Pharmacy Affairs (OPA), just published 2024 data on program purchases: 2024 340B Covered Entity Purchases.

These figures reflect the value of drug purchases at discounted 340B prices by certain hospital types and healthcare providers that receive federal grants administered by different agencies within HHS. 340B discounts can be as steep as 100% off an outpatient drug’s list price.

The purchase data come via Apexus, the HRSA-designated Prime Vendor that oversees most aspects of the program’s management. Apexus is owned by Vizient, one of the largest hospital group purchasing organizations. (Yes, the federal government outsources operations of a program that primarily benefits hospitals to an organization owned by hospitals. ¯\_(ツ)_/¯) If you need a refresher on why this arrangement raises eyebrows, revisit this troubling New York Times exposé on the highly-profitable and secretive Apexus business.

Note that the Apexus figures underreport the 340B program's size, because they exclude sales made directly to healthcare institutions by manufacturers and some sales by specialty distributors. That’s why HRSA acknowledges that the Prime Vendor Program captures “the vast majority but not all 340B transactions.”

Here are some other helpful references:

• For a deep dive into the pharmacy and PBM aspects of 340B, see Sections 11.5. and 12.3.5. of our 2025 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.

• For information on how pharmaceutical wholesalers benefit from the 340B program, see Sections 3.4.4. and 5.3. of our 2025-26 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors.

• The 340B Contract Pharmacy Market in 2025: Big Chains and PBMs Tighten Their Grip (DCI’s most recent annual analysis of this controversial element of the program)

GNARLY GROWTH

The chart shows just how massive the 340B tidal wave have become for drug purchases and contract pharmacies.

[Click to Enlarge]

Observations:

• Discounted purchases made under the program totaled at least $81.4 billion in 2024—an increase of 22.8% over the $66.3 billion for 2023. For comparison, CMS projects that discounted purchases of Medicaid prescription drugs will be a mere $53 billion for 2024.

• The compound average growth rate (CAGR) of 340B purchases was 23.5% from 2015 through 2024. Over the same period, manufacturers’ net drug sales (including COVID-19 vaccines and therapeutics) grew at an average annual rate of only 5.1%. (Source: Understanding the Use of Medicines in the U.S. 2025, page 67)

• According to IQVIA, the wholesale acquisition cost (WAC) list price value of 340B purchases was $147.8 billion in 2024. (Source: The Size and Growth of the 340B Program in 2024, page 2)

• In 2024, the list-to-340B gap—the difference between purchases at list prices and purchases at 340B discounted prices—grew to $66.4 billion (=$147.8 billion minus $81.5 billion). That’s $6.0 billion higher than the 2023 gap. This difference approximates the money collected by 340B covered entities.

• The gross-to-net bubble—which measures the total value of pharmaceutical manufacturers’ gross-to-net reductions for brand-name drugs—was $356 billion in 2024. (source) Therefore, manufacturers’ discounts under the 340B Drug Pricing Program accounted for about 19% of the total gross-to-net reductions for brand-name drugs.

In other words, 340B has quietly become one of the largest single sources of manufacturer discounts in the U.S. drug channel. Yet, no one knows where the funds go, which patients benefit, or if the funds are being used properly.

A quick prebuttal: 340B apologists will claim that the increased purchases reflected manufacturers’ price increases. This purported explanation has been debunked:

• What is Driving 340B Growth: Utilization or Price?, a peer-reviewed study published in Health Affairs Scholar, found that utilization accounted for about 80% of the 340B program’s growth based on list price, and close to 100% of growth based on 340B discount prices.

• In Growth in the 340B Drug Pricing Program, the Congressional Budget Office found that 340B’s rapid expansion is being driven by the strategic choices of hospitals and clinics, not by broader drug pricing trends or overall market dynamics.

Thus, the evidence shows that the 340B program is growing because covered entities are choosing to maximize it—not because list prices are drifting up in the background.

SURFING THE 340B MONEY WAVE

The table below summarizes who was riding the 340B money waves in 2024. As you can see, hospitals were again the primary beneficiaries of the 340B program, with 87% of total 340B purchases.

[Click to Enlarge]

I have long argued that federal grantees, which accounted for only 13% of purchases, are generally (but not always) the 340B good guys. That’s why hospitals routinely hide behind FQHCs and other grantees whenever anyone broaches the topic of modernizing or updating the 340B program.

HRSA WIPES OUT AS CMS PADDLES IN

For some time, I have been predicting that the Inflation Reduction Act (IRA) will crush 340B margins and force transparency into the opaque 340B program. Given HRSA’s record of regulatory capture, I have also suggested that responsibility for the 340B program would be taken away from HRSA and given to CMS.

During last week’s Drug Channels Outlook 2026 webinar, I explained why and how 2026 will be the first year of legitimate structural pressure for the 340B program.

That’s because under the IRA, manufacturers will not be liable for inflationary rebates on Medicare Part D and Part B claims that are eligible for 340B program discounts. The IRA also includes a 340B non-duplication provision, so that a manufacturer is not required to provide both a 340B discount and access to the maximum fair price (MFP) on a selected drug.

While an official HHS reorganization has not yet occurred, CMS rule making shows that control is quickly floating away from HRSA:

• As part of the 2026 Physician Fee Schedule final rule, CMS has issued rules on an initial process for identifying 340B units subject to Part D rebate requirements. The agency estimates that 10% to 35% of total Part D claims will be subject to 340B pricing. It also established a voluntary 340B claims data repository for Medicare Part D claims. Providers are “strongly encouraged” to participate, implying that the repository could become mandatory.

• CMS guidance allows manufacturers to retroactively reimburse pharmacies for the difference between a product’s MFP and its WAC. In response, manufacturers have begun cutting brand-name drug list prices to align more closely with MFPs—a step toward the net price drug channel (#NPDC) that I outlined during last week’s webinar.
  
  As I explain in List Price Reductions Will Deflate the Gross-to-Net Bubble–and Threaten Pharmacy and 340B Profits from IRA-Negotiated Drugs, such list-price reductions will directly reduce the value of the 340B contract pharmacy market for both covered entities and pharmacies.

• As part of the finalized 2026 Hospital Outpatient Prospective Payment System (OPPS), CMS announced its intent to conduct a survey of hospitals’ acquisition costs for outpatient drugs. This survey lays the groundwork for CMS to reduce payments for separately payable drugs and biologics acquired under the 340B Drug Pricing Program. (For the history of CMS’s 2018 reimbursements cuts and their subsequent reversal, see Section 3.2.1. of DCI’s 2025-26 wholesaler report.)

• As far as I know, CMS has not publicly commented on HRSA’s 340B Rebate Pilot. However, its guidance documents have clearly laid the groundwork for such a system, suggesting that it will eventually assume control as the rebate program expands beyond MFP drugs.

Taken together, these moves point to a future in which CMS—not HRSA or even the U.S. Congress—sets the practical rules of the road for 340B, tightens reimbursement, and forces at least some transparency into how much money covered entities are extracting from the program—and from manufacturers.

For years, 340B has been catching monster waves. Now CMS is paddling over with a regulatory lifeguard whistle. Gnarly, dude.