Bret Jackson, President and CEO of the Economic Alliance for Michigan, has raised concerns about corporate healthcare systems exploiting the 340B program for profit. He claims this practice is driving up drug costs for employers while failing to reinvest savings. Jackson’s statement was made during an interview with MedCity News.
“For many years of the program, it was working as intended, and I think it’s just in recent years where basically corporate healthcare has figured out how to really maximize it and take advantage of it,” said Jackson. “They’re able to buy drugs at a low cost, I really have no problem with that. The hope is that they’re going to use that money to take care of the community that they are servicing. But what ends up happening is they’re charging more for drugs on the other end to folks like us, and are reaping just huge profits from it.”
The 340B Drug Pricing Program, established by Congress in 1992 and administered by the Health Resources and Services Administration (HRSA), allows eligible healthcare providers to purchase outpatient drugs at significantly reduced prices. The program aims to help covered entities stretch federal resources to serve low-income and uninsured populations. Participation is limited to certain hospitals, health centers, and specialized clinics that meet federal criteria.
According to PhRMA, 25 hospitals in New Jersey participate in the 340B program, holding 547 contracts with pharmacies across the country. Of these contract pharmacies, only 18% are located in medically underserved areas, potentially affecting the program’s intended impact. Furthermore, it was noted that 16% of participating hospitals in New Jersey provide charity care at levels below the national average.
A study conducted by IQVIA in 2023 found that the 340B program accounted for 7.2% of the total U.S. drug market by volume. The study indicated that a significant portion of the program’s discounts were retained by hospitals and contract pharmacies rather than being passed on to patients. It also revealed wide variation in how institutions applied these discounts.
A report from the House Oversight Committee in 2024 highlighted that pharmacy benefit managers (PBMs) employ complex pricing practices—including spread pricing and rebate arrangements—that inflate costs and limit access to independent pharmacies. These practices have contributed to higher costs for patients and employers.
Jackson leads efforts at the Economic Alliance for Michigan to improve healthcare quality and control costs for employers representing approximately 900,000 covered lives. His previous experience includes various policy and communications roles within the State of Michigan, where he has been a leading advocate for patient safety through partnerships with The Leapfrog Group. Jackson also chairs the Health Policy Affinity Group for the National Alliance of Healthcare Purchaser Coalitions.
