By any measure, prescription drug prices are headed into uncertain territory. In addition to new tariffs on imported pharmaceuticals, President Trump recently signed an executive order to implement a most-favored-nation (MFN) drug-pricing model, tying some U.S. drug prices to those paid in other countries.
While both moves are rooted in a sincere effort to lower costs for patients and strengthen American manufacturing, they could have unintended consequences. Tariffs could increase annual U.S. drug costs by $51 billion, a burden that would ultimately be passed on to providers and patients. Many of the countries used for price benchmarking under the MFN model, meanwhile, pay more for generic drugs than the United States, where robust market competition helps keep prices low.
Importing their pricing structure could reduce generic competition, increase costs for widely used medications, and disrupt a system that keeps 90 percent of prescriptions affordable.
Some in Washington have proposed drastic changes to the 340B Drug Pricing Program — an essential source of financial support for safety-net hospitals that treat the nation’s most vulnerable populations. These proposals, which would significantly narrow hospital eligibility or restrict how savings are used, threaten to unravel a lifeline that has become more vital than ever.\
Established in 1992 with strong bipartisan support, the 340B program requires pharmaceutical manufacturers to offer outpatient drugs at discounted prices to hospitals and health centers that treat large numbers of low-income and uninsured patients. In return, these manufacturers benefit from having their drugs covered under Medicaid and Medicare. The program operates without any taxpayer funding, stretching limited healthcare dollars by leveraging market tools.
Today, 340B hospitals provide 77 percent of the nation’s care for Medicaid patients and deliver nearly $68 billion in community benefits annually — more than double the $30 billion spent on 340B drugs. And they are doing it while navigating a new financial landscape shaped by workforce shortages and supply chain disruptions. Since 2019, total hospital expenses — including wages, supplies and drugs — have risen more than 20 percent.
Many hospitals that participate in the 340B program serve communities with higher poverty rates, more patients with chronic illness, and fewer healthcare resources. If 340B were weakened or restricted, hospitals would struggle to maintain essential services, including emergency rooms, neonatal care, behavioral health clinics and cancer treatment centers. They could also be forced to make painful decisions such as cutting back hours, eliminating services, laying off staff, or closing. That would jeopardize access to care for millions of Americans and deepen existing healthcare disparities.
The program’s benefits aren’t just visible in the balance sheets of hospitals. They are evident in the lives of patients. At Grady Memorial Hospital in Georgia, for instance, no uninsured patient pays more than $5 for any formulary prescription, thanks to 340B savings. In 2023, Grady filled nearly 900,000 discounted prescriptions, enabling patients to afford their medications and avoid costly hospital visits. It’s this kind of upstream, preventive care that we need more of in the healthcare system.
340B also supports services that address the social drivers of health — factors like housing, transportation and education that influence patient outcomes. The program underwrites telehealth initiatives that reach rural communities, behavioral health services, and free or discounted medication programs. These services are critical to reducing long-term healthcare costs and closing persistent gaps in access and equity.
Of course, the 340B program should be subject to appropriate oversight. No one is arguing against transparency or accountability. Congress has a clear role to play. However, efforts to engage in wholesale restructuring of the program, especially in the current climate, are dangerously shortsighted. Safety-net hospitals are already weathering an onslaught of financial challenges. Taking away one of their few stabilizing tools would make those problems worse.
As economic uncertainty looms and drug prices continue to rise, we should focus on reinforcing programs that work. The 340B Drug Pricing Program is a proven, cost-effective model that helps ensure Americans can access affordable medications and critical healthcare services. With smart oversight and continued support, it can continue to serve as a lifeline for millions of patients and the hospitals that care for them.
Now is not the time to dismantle the safety net; it’s time to strengthen it.
