Show-Me State Times

The Mackinac Center announced on X that the federal 340B drug pricing program allows hospitals and contract pharmacies to profit from discounted drugs, with little evidence that patients benefit from the savings, a concern that’s drawing attention in Missouri.

According to the Mackinac Center, the 340B Drug Pricing Program—established by Congress in 1992—was designed to help hospitals provide affordable medications to uninsured and low-income patients but has since become a source of revenue for hospitals and contract pharmacies. The Center argues that hospitals often purchase drugs at steeply discounted prices, resell them at full cost, and retain the profit, with no federal requirement to pass savings on to patients. Policy experts at the Mackinac Center stated that this dynamic has transformed a well-intentioned public health program into a mechanism of government favoritism, distorting competition and disproportionately benefiting large hospital systems.

According to a 2023 report by the U.S. Government Accountability Office (GAO), the 340B program has grown significantly over the past decade, with more than 2,600 hospitals and over 50,000 contract pharmacies now participating nationwide. The GAO found that many covered entities fail to demonstrate that the savings are used to reduce costs for patients or to expand access to care for vulnerable populations. The Mackinac Center cited this finding as evidence that the 340B program has expanded beyond its intended scope, creating a parallel revenue system for hospitals while reducing transparency and accountability within the healthcare market.

PhRMA reported that 42 hospitals in Missouri participate in the 340B program, holding more than 1,400 contracts with pharmacies nationwide. Just 22% of these contract pharmacies are situated in medically underserved areas, while 79% of participating hospitals provide charity care below the national average, fueling questions about whether patient benefit matches program scale.

The Mackinac Center for Public Policy is a Michigan-based nonprofit research and educational institute founded in 1987 that advocates for free-market principles, limited government, and individual liberty. The organization produces policy research, publishes commentary, and provides legislative analysis on topics including healthcare reform, taxation, and economic growth. Through its advocacy work and independent research, the Mackinac Center seeks to inform policymakers and the public about how market-driven solutions can create more accountable and efficient governance.