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 Jersey. 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.
National studies of 340B oncology and infusion drugs indicate that after eligibility broadened, participating hospitals in several states, including New Jersey, raised spending on outpatient-administered drugs for commercially insured patients without clear evidence of matching savings for those patients. The research suggests that 340B incentives may drive higher markups and shifts in care settings, prompting doubts about whether New Jersey residents see any direct reduction in their medical expenses.
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.
