Purchases made through the 340B drug discount program reached $100B last year, more than double their total in 2021. Disproportionate Share Hospitals (DSHs), which qualify for 340B by serving a significant share of low-income patients, are responsible for about 80 percent of these purchases, a figure that has remained consistent over time. The single greatest explanation for the rapid growth of 340B seems to be the proliferation of contract pharmacies. The 13K covered entities participating in 340B are now contracted with over 32K pharmacy locations, about 60 percent of all US pharmacies, compared to fewer than 2K locations in 2011. But 340B also has also grown along with the overall prescription drug market and taken advantage of the outpatient shift (only outpatient drugs are 340B-eligible), meaning both the size of the pie and 340B’s slice of it have been increasing.
 
The headwinds against 340B’s growth have also been strengthening. Drugmakers have been trying various strategies for years to limit 340B purchases, leading to endless litigation. They may find more success under the Trump administration, which is attempting to cut Medicare payments for 340B drugs and was recently stopped by the courts from implementing a rebate model that would reimburse covered entities later, rather than providing them upfront discounts. The program has clearly ballooned past Congress’s original intentions, but too many hospitals now heavily depend on 340B as a financial lifeline, making the stakes of reform existential.