Molly Jenkins, Senior Director of Public Affairs at the Pharmaceutical Research and Manufacturers of America (PhRMA), said that the 340B program is increasing Medicare costs by blocking rebates and worsening taxpayer burdens — an issue garnering attention in New York. This statement was made on the PhRMA blog.
The 340B hospital markup program is costing taxpayers an estimated $13.4 billion a year in lost Medicare rebates,” said Jenkins. “When hospitals purchase medicines at the 340B price, Medicare cannot collect rebates intended to reduce federal spending. This means that as more tax-exempt hospitals exploit the 340B program as a profit center, Medicare costs also rise. This number is expected to continue to increase due to program growth and additional lost inflation rebates.”
According to BRG’s October 2025 issue brief, Medicare missed out on $13.429 billion in 2023 due to the 340B status. Approximately $13.41 billion in Part D negotiated rebates and $19 million in Part B inflation rebates were forgone, representing 17% of total potential rebates and about 7% of Part B and Part D net drug spending for that year. BRG attributes this loss to duplicate-discount exclusions for 340B units built into statute and contracts.
Milliman’s July 2025 analysis indicates that outpatient drug spending at 340B Disproportionate Share Hospitals (DSH) is significantly higher per patient compared to non-340B DSH hospitals. In Medicare Fee-for-Service (FFS) in 2022, the average outpatient drug spend per hospital patient was $961 at 340B DSH hospitals versus $360 at non-340B DSH hospitals, a difference of approximately 2.7 times. The study primarily attributes this gap to a more expensive drug mix in 340B settings and notes that this pattern persists even after controlling for observable patient factors and service categories.
In New York, 113 hospitals take part in 340B and manage more than 6,100 pharmacy contracts nationwide, but just 24% of those pharmacies are in medically underserved areas and 86% of 340B hospitals provide charity care below the national benchmark. New York Medicaid rules now require 340B-purchased drugs billed to Medicaid to be submitted at actual acquisition cost with explicit 340B designations, reflecting rising scrutiny over transparency and whether funds are truly easing prescription burdens for low-income residents.
According to her PhRMA author profile, Jenkins focuses on communications strategies tied to cost and value priorities as Senior Director of Public Affairs. Before joining PhRMA, she led issue-advocacy and reputation campaigns at a public affairs firm and previously worked on Capitol Hill in various roles, including congressional communications positions.
