The embattled 340B Drug Pricing Program, now the second-largest federal prescription drug program in the United States behind Medicare Part D, should be placed under the oversight of the Centers for Medicare and Medicaid Services (CMS), according to a new policy paper and call to action from ADAP Advocacy. The organization argues that the Health Resources and Services Administration (HRSA) has failed over 34 years to adequately regulate or enforce the program's statutory requirements, allowing it to prioritize provider interests over patient interests.
In its policy paper, "340B Program: The Glue That Should Hold Our Healthcare System Together", ADAP Advocacy acknowledges the program's potential as a vital part of the healthcare system but notes that its growth has outpaced the ability to see how it actually helps patients. The 340B Program, created in 1992 under the Veteran's Health Care Act, requires pharmaceutical companies to sell outpatient drugs at steep discounts to covered entities such as disproportionate share hospitals, hemophilia clinics, and Ryan White HIV/AIDS Program (RWHAP) providers. These entities are then required to reinvest those savings into expanding access for low-income and underserved patients.
However, according to ADAP Advocacy CEO Brandon M. Macsata, the program has been allowed to grow unchecked without transparency or meaningful regulation. "Unfortunately, HRSA has demonstrated over 34 years that they are simply unable to adequately ensure that covered entities are using the significant revenues they enjoy from 340B sales in ways that comport with either the spirit or the letter of the law," Macsata said.
According to HRSA, 340B drug sales in 2025 totaled over $100 billion, with hospitals accounting for more than 79% of purchases. Yet, only a few covered entity types, such as RWHAP providers, are required to disclose total revenues and how they are spent. Marcus J. Hopkins, ADAP Advocacy's Lead Health Policy Consultant, emphasized the need for transparency: "At a time when both access to and the quality of healthcare services for rural and poor Americans are being sacrificed for being too costly and not generating enough revenue, the very least that covered entities can and should be required to do is disclose how the 340B revenues they receive are being spent."
ADAP Advocacy's research, which examined 98 hospitals that reported charity care expenditures on federal Form 990s, found that only 27 hospitals increased charity care as a percentage of annual revenues after becoming eligible for the 340B Program, while 41 saw decreases of 50% or greater. This suggests that many covered entities are not fulfilling their statutory obligation to reinvest savings into patient care.
Macsata argued that CMS has the regulatory and enforcement experience necessary to address these issues. "When hospital CEOs literally tell members of Congress that they 'will not comply' with any transparency standards they might implement, it's time for substantive change," he said. The shift to CMS oversight could bring stronger accountability and ensure that the program's benefits reach the patients it was designed to help.
