Across the country, lawmakers from both sides of the political spectrum are demanding transparency in the federal 340 B drug rebate program.
The “B”, as it turns out, ought to stand for “boondoggle.”
Congress enacted Section 340B of the Public Health Service Act in 1992 with the stated goal of providing inexpensive pharmaceuticals to hospitals and clinics that serve low-income and uninsured patients who are paying out of pocket. The program enables participating healthcare organizations to purchase drugs at a significant discount from drug manufacturers, theoretically allowing hospitals and clinics engaged in charity care—offering free or discounted services to low-income or vulnerable patients—to allocate more resources to assisting the needy.
But Congress, in its infinite wisdom, placed few guardrails on the program. When 340B hospitals prescribe discounted drugs to patients, they can charge insurance plans—or uninsured patients paying out-of-pocket—as much as they want, and there’s no requirement that they use the profits or savings to expand care for the uninsured or otherwise disadvantaged. Some estimates suggest 340B hospitals charge, on average, nearly three times what they initially paid for the medications.
Congress, which described the 340B program in 1992 as an effort to stretch “scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services,” did not even require that participating healthcare organizations disclose the amount they spend on charity care.
Hospitals have wasted no time taking advantage of 340B, which is now the second largest federal pharmaceutical program. Participation has exploded since the program’s inception, going from 90 hospitals in 1992 to over 2,600 today.
It’s no mystery why hospitals are eager to sign up. The Berkeley Research Group estimates that hospitals earn an average profit margin of 72% on 340B drugs, compared to just 22% for drugs purchased outside the program. Berkeley estimated hospitals brought in over $13 billion in profits in 2018. Unfortunately, two-thirds of those hospitals are outside of medically underserved areas—the very places 340B was designed to help.
It’s not only hospitals that benefit from the 340B program.
Due to a change implemented under President Barack Obama (D), for-profit retail pharmacies make billions by fulfilling prescriptions through the 340B program. The original program required participating hospitals to use their own “in-house” pharmacies to fulfill prescriptions, a rule that limited who could benefit from 340B. Now, for-profit pharmacy chains can get a cut of the profit that hospitals earn from prescribing discounted drugs to patients.
Unsurprisingly, the number of contract pharmacies has exploded since 2010, with over 32,000 locations (more than half of all pharmacies) now fulfilling prescriptions for the 340B program. More than three-quarters of those locations are owned by CVS, Walgreens, and Walmart, the largest pharmacy chains in the country.
Republican and Democratic led states have begun stepping in to require transparency from organizations participating in 340B. MultiState, an organization that tracks legislation, identified 340B reform bills introduced in 15 states in 2025. One of those states was Idaho, which passed a law—HB 136—requiring 340B hospitals and clinics in the state to submit annual financial reports on drug expenditures and revenues to the Department of Health and Welfare. The reports must include data on how much of the money made off the 340B program goes to charity care, allowing Idaho residents and legislators to know if the program is actually serving needy populations.
Idaho State Representative Jordan Redman (R), who sponsored the bill, said, “By requiring 340B-covered entities to report detailed financial data, this bill aligns with Idaho’s longstanding efforts to ensure that public funds and taxpayer-supported programs are used responsibly.”
Wyoming’s hospitals participate in, and benefit from, the 340B program. But how much do residents benefit?
According to PhRMA, a pharmaceutical trade group, Wyoming’s 15 participating 340B hospitals spend just 1.7% of their total expenses providing care to low-income or uninsured patients who are paying out of pocket—32% less than the national average. PhRMA notes that between 2014 and 2022, Wyoming hospitals actually decreased their spending on needy patients by 43%.
Hospitals and their lobbying groups oppose greater transparency in the 340B program because it has allowed them to generate billions in profits while demanding little in return. There’s no evidence 340B hospitals are using profits from the discounted drugs to expand care for the populations the 340B program is supposed to help. Each time Congress, the Department of Health and Human Services (HHS), or the courts appear willing to take a hard look at the program, the American Hospital Association (AHA), which represents thousands of hospitals, sends a barrage of lobbyists to D.C. to snuff out those efforts.
Politico reported in 2023 that AHA “has opposed proposals to ‘dramatically” expand reporting requirements and policies that would “scale back” or “significantly reduce the benefits” of the program.
Unlike in neighboring Idaho and Utah, Wyoming’s elected officials have dragged their feet on demanding accountability from the powerful hospitals given carte blanche to mark up drugs they buy at a discount. That may have something to do with the pervasive influence of the Wyoming Hospital Association, one of the most powerful lobbying groups in the state. The Wyoming Hospital Association PAC donated to 68 state lawmaker campaigns in the last two years, and its ties to AHA run deep.
Wyoming lawmakers have the opportunity to bring transparency to and help reform a misbegotten federal program that has strayed far from its original purpose of helping the disadvantaged, pushes up healthcare costs for ordinary taxpayers, and disproportionately benefits the largest hospitals and pharmacy chains in the country.
This isn’t a partisan issue: it is common sense. Wyoming families, who already shoulder some of the highest healthcare costs in the western United States, have a right to know if the state’s 340B hospitals are abusing the spirit of the program by jacking up drug prices and pocketing the profits. A simple bill requiring transparency from hospitals is just what the proverbial doctor ordered.
Whether lawmakers actually fill that prescription and stand up to special interests remains to be seen.