10 Apr It’s Time to Hold Hospitals Accountable for Rising Drug Prices
Kevin Kimble
Southern Christian Leadership Global Policy Initiative
April 10, 2026
https://dcjournal.com/its-time-to-hold-hospitals-accountable-for-rising-drug-prices/
Congress last month hauled healthcare providers to Capitol Hill and demanded they explain various hospital practices that needlessly inflate healthcare bills.
This is an important first step, but lawmakers ought to focus their investigation on one particularly pernicious practice: hospitals’ abuse of a little-known federal charity program. Congress created the 340B program in 1992 to support safety-net hospitals that serve low-income patients. The program requires manufacturers to give these hospitals significant discounts on medicines.
Lawmakers assumed that hospitals would pass those savings on to patients, or use them to improve services and increase charity care.
Over the years, hospitals have turned the 340B program into a money-making machine, driving spending even higher and leaving many patients worse off.
Many large hospitals are taking advantage of the program’s loose eligibility requirements to enroll, dramatically expanding its footprint. Lawmakers originally expected 90 hospitals to enroll; today, more than 2,600 hospitals participate.
Large hospital systems have established thousands of satellite clinics and contracted with for-profit pharmacies in affluent areas, where patients are more likely to have insurance coverage. Because those sites are technically connected to a qualifying hospital, they qualify for 340B pricing.
Hospitals then buy those discounted drugs, mark them up, and bill insurers and patients at much higher rates, sometimes more than 10 times what they paid. In some cases, hospitals deliberately use more expensive drugs over lower-cost alternatives to further increase their margins.
Crucially, patients rarely see the benefits of these discounts; hospitals are pocketing the profits. A Government Accountability Office analysis found that only about half of covered entities offered discounts on 340B drugs to low-income, uninsured patients at their contract pharmacies. And among those that did, a fourth failed to pass along the full discount.
Many 340B hospitals earn far more from 340B than they spend on charity care. In fact, 340B hospitals provide charity care at lower rates than non-340B hospitals.
Instead of making healthcare more affordable, the 340B program is all too often making it more expensive. More than half of low-income Americans say it’s either somewhat or very difficult to afford healthcare costs. Uninsured adults are twice as likely to struggle to pay for healthcare, compared to insured adults. More than a third of Black and Hispanic adults are “very worried” about affording prescription drugs.
Congress has an opportunity — and an obligation — to demand accountability. Lawmakers should close the loopholes that allow hospitals to exploit 340B and ensure that discounts actually reach patients. Restoring 340B to its intended purpose would help ensure that vulnerable Americans receive the care they deserve.