The Current Status of the 340B Program

In June of this year, Pharmaceutical Executive reported on Eli Lilly’s efforts to cut off 340B discounts to hospitals that the pharma company says have not submitted claims data. In response, the American Hospital Association (AHA) requested that the federal government take action.

At the time, this was the latest chapter in the ongoing effort to implement the 340B Drug Pricing Program, which has seen the AHA face off against the various pharma companies whose drugs were included in the government’s list of covered products back in October, 2025.

Pharmaceutical Executive recently spoke with Tyler Seville, associate director of market access policy strategy at ADVI, about the ongoing 340B issues. He primarily focused on a recent study from ADVI that looked into policy concerns and operational challenges. He also discussed how 340B appears to be interacting with other drug pricing programs, such as the Inflation Reduction Act (IRA).

Pharmaceutical Executive: What is the current status of the 340B program?
Tyler Seville: At its core, the 340B program requires manufacturers already participating in Medicaid and Medicare Part B to provide additional outpatient drug discounts for certain covered entities — typically nonprofit or state-owned hospitals. Manufacturers are required to offer the 340B discounted price, and covered entities are able to acquire drugs at that price and then bill plans and payers at a much higher rate — whether the commercial rate or the Medicare rate. The delta between the discounted acquisition price and the reimbursement rate is what covered entities are able to keep.

The goal and intent of the program is to stretch resources. It was designed to support hospitals and covered entities in high-need areas — disproportionate share hospitals, children's hospitals, and federally qualified health centers. Unfortunately, the program has grown exponentially over the past decade and beyond. What was once a program generating less than $10 billion annually has now grown to over $100 billion, based on the latest data from HRSA. A program that was initially intended to be small and targeted — a way to cover the gaps that exist within Medicare and Medicaid — is now larger than Medicaid, larger than Medicare Part B, and on track to exceed Medicare itself within a few years.