Shawn Gremminger, CEO of the National Alliance of Healthcare Purchaser Coalitions, said the federal 340B program incentivizes hospital acquisition of oncology practices. The program is utilized by 84 Missouri hospitals.
“As soon as you get bought by a hospital, they’re able to get 340B discounts on your drugs,” said Gremminger, President and CEO. “So particularly in the oncology space, where the drug price makes up a huge part of the revenue, there’s a profound incentive for the hospital to want to buy the oncology practice. And there’s a pretty strong incentive for the oncology practice to just become part of a hospital because the physicians get some [revenue] as well.”
The 340B Drug Pricing Program was established by Congress in 1992. It allows eligible healthcare providers to purchase outpatient drugs at significantly reduced prices, enabling them to stretch limited federal resources and provide more comprehensive services to vulnerable populations. Eligible entities include certain hospitals, community health centers, and specialized clinics that meet federal requirements.
According to PhRMA, 42 hospitals in Missouri participate in the 340B program, holding over 1,400 contracts with pharmacies nationwide. Only 22% of these contract pharmacies are located in medically underserved areas. Additionally, it was reported that 79% of participating hospitals in Missouri provide charity care below the national average, raising questions about whether the program is effectively serving its intended populations.
The JAMA Health Forum reports that hospitals participating in the 340B program have been more likely to acquire independent physician practices, resulting in increased hospital-based outpatient care. This trend has raised concerns about potential cost increases and shifts in care delivery. Stakeholders continue to debate the implications of this pattern for patient care and healthcare costs.
A study published in 2024 by the National Library of Medicine found that the number of 340B contract pharmacy arrangements increased from 1,300 in 2010 to over 60,000 by 2022. The study raised concerns about financial distribution and noted a lack of evidence that patients directly benefit from the savings. Researchers called for greater transparency in the program’s financial flows.
Gremminger is President and CEO of the National Alliance of Healthcare Purchaser Coalitions. He leads national policy efforts to promote cost transparency and value-based care for employer purchasers. He previously served in leadership roles at Families USA, Purchaser Business Group on Health, and America’s Essential Hospitals. Gremminger holds a Master of Public Policy from The George Washington University.
