$53.7 Billion in 340B Purchases? Good. It Means the Program Is Working

Understanding What the Number Represents 

In 2022, hospitals and other covered entities participating in the 340B Drug Pricing Program purchased a total of $53.7 billion in outpatient drugs. This figure, recently reported by the Health Resources and Services Administration (HRSA), has drawn renewed scrutiny from critics of the program. To some, this growth in purchasing signals misuse, excess, or mission drift.

That interpretation is flawed.

The size of 340B drug purchases should not be viewed as a proxy for program failure. Rather, it reflects the evolving realities of hospital-based care: rising pharmaceutical costs, increasing outpatient treatment volume, and growing reliance on specialty medications. When understood in context, the figure demonstrates that 340B is functioning as designed—allowing safety-net providers to acquire necessary medications and sustain access to care for patients who are underinsured, publicly insured, or without insurance altogether.

Gross Purchases Are Not Equivalent to Net Savings

It is important to emphasize that the $53.7 billion cited by HRSA refers to the gross acquisition cost of drugs at list price, not the actual amount paid by hospitals. Under the 340B program, covered entities typically purchase medications at discounts ranging from 25 to 50 percent, depending on the drug class and manufacturer pricing strategies.

In effect, the net spend on 340B drugs is significantly lower than the reported gross figure, and the margin between the 340B acquisition cost and payer reimbursement is reinvested into uncompensated care, pharmacy access, community health programs, and financially unviable—but clinically necessary—services.

Drivers Behind the Increase

The increase in total 340B drug purchases is the result of several interrelated factors. None are specific to the program’s mechanics. All are reflective of broader trends in American healthcare.

1. Drug Prices Are Rising

The upward trajectory of pharmaceutical prices has been well documented. A 2023 JAMA study reported that the median launch price for new brand-name drugs exceeded $220,000 per year, more than doubling in less than a decade. Hospitals do not set these prices, but they are responsible for acquiring these medications for patients regardless of payer status. When the baseline cost of drugs increases, total 340B purchase figures naturally rise as well—even if hospital purchasing behavior remains constant.

2. Outpatient Care Is Expanding

There has been a systemic shift toward outpatient care, particularly in oncology, rheumatology, and other specialty services that rely on high-cost infused or injected therapies. According to the American Hospital Association, outpatient revenue surpassed inpatient revenue for hospitals in 2019, and the divide has continued to grow. As more treatments are delivered in outpatient settings, the volume of 340B-eligible transactions increases proportionally.

3. The Pharmaceutical Mix Has Changed

Specialty drugs now account for over 50 percent of national drug spending, up from 27 percent in 2010. These therapies—used to treat cancer, autoimmune disorders, HIV, and rare diseases—tend to be expensive, and they are often administered in hospital-affiliated clinics. As prescribing patterns shift toward these high-cost products, covered entities are acquiring more of them under 340B pricing, contributing to higher overall purchase totals.

The Alternative Is Worse

If hospitals were unable to access medications at 340B pricing, the consequences would be immediate and significant. Safety-net providers would be forced to curtail outpatient pharmacy services, scale back infusion and specialty clinics, or eliminate support programs that rely on 340B revenue to remain viable. In many rural and underserved areas, 340B is the only financial mechanism allowing hospitals to offer certain services at all.

Program critics sometimes argue that 340B has grown too large or become too central to hospital operations. But this is not evidence of abuse. It is evidence that hospitals have few other tools to meet rising demand in an environment of chronic public payer underpayment and limited external subsidy.

Conclusion

$53.7 billion is a substantial number, but it must be interpreted in context. It reflects the scale of modern pharmaceutical care, the complexity of patient needs, and the increasing reliance on outpatient delivery models. It does not reflect excessive use, profiteering, or systemic abuse.

The 340B program continues to function as intended. It enables hospitals and health centers to extend care to more patients, absorb financial losses in essential service lines, and maintain operations in communities where no alternative providers exist. Growth in program utilization is not inherently a problem. It is, in many respects, a sign of its necessity.

In short, the volume of 340B purchases is not a warning signal. It is a measure of demand being met—quietly, efficiently, and often without thanks.