Sally Pipes, President and CEO of the Pacific Research Institute, said the 340B program’s structure drives consolidation and higher costs by rewarding hospitals for acquiring clinics and marking up discounted drugs — an issue garnering attention in Pennsylvania. The statement was made on the social media platform X.
“The 340B program has fueled major consolidation in healthcare”, said Pipes. “When 340B hospitals buy up clinics, each becomes a new entity that can buy discounted drugs and sell them at huge mark-ups — reducing competition, narrowing patient choices, and driving costs up”
According to the Congressional Budget Office’s Sept. 2025 analysis, 340B’s rapid expansion was propelled by post-2010 guidance allowing unlimited contract-pharmacy arrangements. CBO also flags “increased vertical integration” by hospitals, greater ownership/affiliation of outpatient sites as a factor shaping spending, echoing concerns that program incentives can reinforce consolidation and site acquisitions.
A 2024 Health Affairs Scholar study revealed hospitals in the 340B Drug Pricing Program generated substantial profits from discounted drug purchases, with limited evidence that those savings improved access or affordability for low-income patients. The researchers concluded that most 340B hospitals did not provide higher levels of charity care compared to non-340B institutions.
Pennsylvania hospitals hold more than 2,200 340B pharmacy contracts, but just 29% of those pharmacies are in medically underserved communities. At the same time, 88% of 340B hospitals in the state deliver charity care below the national norm. Taken together, this points to sizable 340B revenue flows without clear, corresponding financial relief for patients.
Sally C. Pipes leads PRI as President, CEO, and Thomas W. Smith Fellow in Health Care Policy. She has headed the California-based think tank since 1991 and writes widely on drug pricing and delivery reform. Her PRI role and long tenure establish her as a prominent voice advocating for 340B changes aimed at aligning program benefits with patients rather than institutional margins.
