Since its inception in 1992, the 340B Drug Pricing Program has grown from a relatively small initiative into a central feature of the U.S. healthcare system that heavily impacts drug pricing and hospital financials. The program requires pharmaceutical manufacturers that participate in Medicaid to provide covered outpatient drugs to specified eligible healthcare providers at or below a statutory ceiling price.
Several recent developments suggest the program is approaching an inflection point and that reforms are likely in the near future. Purchases by covered entities under the 340B program surpassed $100 billion in 2025, according to the Health Resources and Services Administration. That is more than a twofold increase from four years earlier, when the program purchases were $43.9 billion. The 340B program interacts heavily with other federal drug pricing programs, including Medicaid Best Price and Medicare Maximum Fair Prices. In the outpatient prospective payment system (OPPS) proposed rule for 2027, the Centers for Medicare and Medicaid Services lays out a plan to reduce payments for Medicare Part B 340B drugs reimbursed through the OPPS.
Given its current size, interactions with other federal drug pricing programs, and impact on provider financials, 340B will continue to be an area that healthcare stakeholders and policymakers evaluate as a means to address healthcare affordability. The current proposed change to OPPS payments for 340B drugs could materially change stakeholder incentives, as well as have material downstream financial effects on non-340B hospitals, Medicare Advantage plans, and beneficiaries.
The paper covers the following key topics.
- Background on the 340B program: Statutory purpose, 340B ceiling price, the current OPPS proposal, and other items.
- 340B outpatient drug spending in Medicare: Research Identifiable Files to analyze Part B 340B drug claims across all patients in the Medicare fee-for-service market.
- Implications of the proposed 2027 OPPS rule: Reimbursement examples, budget neutrality, and stakeholder impacts.
- Additional considerations: Dynamics for stakeholders.