Idaho hospitals are exploiting a drug pricing subsidy | Opinion
Idaho Republicans spent the last year as a vanguard for the America First policy agenda, helping President Donald Trump root out waste and corruption in federal programs. Now, it’s time for them to turn that same scrutiny towards a federal charity program that hospitals are exploiting to line their own pockets at the expense of patients.
Congress created the 340B Drug Pricing Program with good intentions. Lawmakers required drug manufacturers to provide steep discounts to certain safety-net hospitals that could then use the savings to reduce drug prices or provide more charity care to patients.
Thirty years later, it has become a classic case study in mission creep due to the loose 340B requirements and lack of oversight. What started as a small initiative for roughly 90 hospitals has exploded into a massive, unregulated industry involving over 2,600 hospitals nationwide. Purchases under this program account for about 10% of U.S. drug spending, hitting roughly $81 billion in 2024.
Many of these hospitals use the program to buy cheap drugs and resell them at steep markups, sometimes at five to 10 times their acquisition cost. Yet patients rarely see the savings. Data show these hospitals tend to provide less money for charity care than they receive from the 340B program. Instead, they pocket windfall profits.
In Idaho, these abuses are egregious. Idaho has 31 340B facilities per 100,000 people, nearly double the national average. Over 80% of 340B hospitals provide below-average levels of charity care. Some earn over seven times more in 340B profits than they spend on charity care.
Qualifying hospitals routinely create a vast network of satellite clinics in affluent areas, where patients are more likely to have robust insurance or personal income that will cover marked-up prescriptions. Others contract with third-party pharmacies, similarly seeking to extract money from patients. Because of a loophole in the program, these facilities qualify for 340B too. In Idaho, over 60% of contract pharmacies aren’t even located within the state.
Hospitals’ abuses of the program drive drug spending ever higher and cost taxpayers in the form of higher Medicare costs, as well as employers and workers who foot the bill for higher insurance premiums and out-of-pocket charges.
That’s why the Trump administration is taking action to resolve these clear program discrepancies through a proposed 340B reform pilot program that requires manufacturers to provide hospitals with rebates after they administer drugs, rather than give nonsensical up-front discounts. In order to receive discounted pricing, hospitals and other covered entities must provide reasonable documentation proving that the drugs dispensed qualified for 340B.
These are common sense, fiscally responsible steps — especially for a program dealing with tens of billions of dollars in possible savings for patients.
But the pilot is encountering resistance from some lawmakers, mostly Democrats, who are pushing to halt funding for the pilot before it begins or weaken its requirements with loopholes and exemptions that would allow abuse to continue. Idaho patients and taxpayers are counting on Congressman Mike Simpson to stand with President Trump and support the comprehensive pilot program to protect taxpayers and patients.
Idaho has already led the way on reform at the state level. Last year, our legislature passed landmark reporting requirements forcing 340B entities to disclose acquisition costs and how hospitals actually use their savings. It is now time for our federal lawmakers to follow suit and support the Trump administration’s effort to create greater accountability and transparency.
Dr. Roger Stark is a visiting fellow with Mountain States Policy Center, a research organization based in Idaho, Montana, eastern Washington and Wyoming. A retired surgeon, Dr. Stark has authored three books.