The 340B Program Hit $100 Billion in 2025: Has It Become Too Big to Reform?

By Adam J. Fein, Ph.D.

The 340B Drug Pricing Program continues to redefine the meaning of "skyrocketing."

• For 2025, discounted purchases under the 340B program reached an astounding $100 billion—23% higher than in 2024.

• The gross-to-net difference between list prices and discounted 340B purchases—a proxy for funds available to covered entities—also grew, to $79.5 billion (+$12.0 billion).

• Hospitals again accounted for 87% of 340B purchases.

• 340B purchases are now more than 70% 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.

During DCI’s June webinar, I predicted that the 340B program would move from an era of expansion and opacity to one of transparency and accountability.

But given the latest growth figures, I worry that reform of this undermanaged, out-of-control program may never happen. Has the program become too big to reform?

Read on for our full analysis—and consider whether 340B will ever face its true day of reckoning.

Click here to share your thoughts on the latest 340B data with the Drug Channels community on LinkedIn.

I 💘 DATA

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 2025 data on program purchases: 2025 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.) 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 Section 11.5. of our 2026 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.

• The 340B Contract Pharmacy Market in 2026: A Maturing Industry Dominated by Big Chains and PBMs (DCI’s most recent annual analysis of this controversial element of the program)

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

ICYMI, our most recent video webinar provided a primer on the program’s operations and current issues: 340B in 2026: Market Shifts, Policy Battles, and What They Mean for Stakeholders.

340BOOM

The chart below shows just how monstrous the 340B has become and how quickly it has grown.

[Click to Enlarge]

Observations:

• Discounted purchases made under the program totaled at least $100.0 billion in 2025—an increase of 22.8% over the $81.4 billion for 2024. For comparison, CMS estimates that discounted purchases of Medicaid prescription drugs were a comparatively small $58.5 billion for 2025.

• The compound annual growth rate (CAGR) of 340B purchases was 22.1% from 2010 through 2025. That means the program grew by an average of 22% per year over the past 15 years.
  
  Meanwhile, manufacturer sales grew at one-third of this rate. From 2015 to 2025 (the most recent period with updated data), manufacturers’ net drug sales (including COVID-19 vaccines and therapeutics) grew at an average annual rate of 7.3%. (Source: U.S. Medicine Use Trends 2026, page 70)

• According to IQVIA, the wholesale acquisition cost (WAC) list price value of 340B purchases was $179.5 billion in 2025. (Source: The Size and Growth of the 340B Program in 2025, page 3)

• In 2025, the estimated value of the 340B discounts—the difference between purchases at list prices and purchases at 340B discounted prices—grew to $79.5 billion (=$179.5 billion minus $100.0 billion). That’s $12.0 billion (+17.8%) higher than the 2024 gap. This difference approximates the money retained 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 $416 billion in 2025. (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.

Some program advocates argue that this incredible growth simply reflects higher manufacturer prices. Alas, the evidence says otherwise:

• 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 concluded that only about one-third of 340B’s growth was due to “growth in drug spending and disproportionate growth among drug classes that account for more spending in the 340B program than in the overall market,” e.g., oncology drugs. Instead, CBO attributed growth to hospitals’ acquisition of physician clinics and the rapid expansion of contract pharmacies.

Thus, the evidence indicates that growth reflects strategic expansion by 340B covered entities—not merely increases in manufacturers' list prices or overall industry growth.

FOLLOW THE 340B DOLLARS

The table below shows who benefited from the 340B program's enormous footprint in 2025. As you can see, hospitals remained the primary beneficiaries of the 340B program, with 87% of total 340B purchases.

[Click to Enlarge]

Neither I nor others have argued for dismantling the 340B program, nor have we treated all covered entities as though they belong in a single category. I have consistently argued that federal grantees and certain other covered entities are generally (though not always) the 340B good guys.

By contrast, disproportionate share hospitals (DSHs), which account for nearly 80% of 340B purchases, routinely hide behind grantees and other safety-net providers whenever anyone proposes modernizing or reforming the program. Yet the overwhelming majority of documented examples of 340B abuse involve DSHs.

As my colleague Bryce Platt pointed out, Minnesota’s nonprofit hospitals received nearly $1.3 billion dollars in 340B net profits on top of $374 million in tax exemptions tied to their nonprofit status. Meanwhile, these hospitals provided less than $360 million in uncompensated and charity care. See Minnesota’s 340B Hospitals Make One Billion More From 340B Than They Spend on Uncompensated Care.

TOO BIG TO FAIL?

Safety-net providers serve legitimate and important functions that require public support. But as Anthony DiGiorgio has argued:

"Nobody is saying poor and sick patients should be abandoned. Hospitals do perform some genuine community functions. Trauma care, standby capacity, teaching, and care for vulnerable patients are real obligations. But if those functions require public support, then subsidize them directly, transparently, and in a form that can be audited."

As I predicted in my analysis of the 2024 spending figures, 340B’s day of reckoning is coming soon.

Thanks to the Inflation Reduction Act (IRA), manufacturers increasingly face the risk of triplicate discounts on the same prescription: an upfront 340B discount, an IRA Maximum Fair Price (MFP) refund, and a Medicaid rebate paid to states.

That’s why the Centers for Medicare & Medicaid Services’ (CMS) regulatory takeover of the 340B program—not Congress—will continue to drive many of the most significant changes to this clearly-out-of-control program. CMS has no choice but to accelerate efforts to improve the program’s operations and increase visibility into 340B claims and transactions.

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.

Other forces of change will also exert pressure on the program:

• The Net Pricing Drug Channel (#NPDC) will reduce 340B margins for covered entities and lower fee opportunities for contract pharmacies.

• Plan sponsors will intensify efforts to stop rebate losses from 340B contract pharmacy claims.

340B was originally designed as a narrow policy solution to address an unintended consequence of Medicaid’s best-price provision while supporting core safety-net providers. Professor Sayeh Nikpay’s outstanding research makes a compelling case that today’s 340B program extends far beyond Congress’s original intent in 1992. At $100 billion, the program has become a policy kaiju.

The 340B program urgently needs modernization to address the structural flaws and warped incentives that have accumulated over the program’s 34-year history. The healthcare system has changed significantly since the 340B program was introduced in 1992. Without meaningful changes, the program’s economic incentives will continue to favor scale, consolidation, and profit maximization over the original mission of supporting true safety-net providers and expanding access for low-income and uninsured patients.

The era of an effectively unregulated 340B program is coming to an end. But with $100 billion in annual benefits (and growing), the program’s vested interests will fight hard to preserve every penny. That's what happens when a policy’s unintended consequences become an industry.