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Our Take: Feature: CBO report analyzes 565% increase in 340B drug spending over 11 years

September 15, 2025

Feature: CBO report analyzes 565% increase in 340B drug spending over 11 years

From 2010 through 2021, spending through the 340B Drug Pricing Program increased from $6.6 billion to $43.9 billion, reflecting an average annual growth of 19%, according to a new report by the Congressional Budget Office.

Only about one-third of the increase, $13.6 billion, was attributable to a combination of marketwide growth in drug spending ($3.2 billion of the increase) and disproportionate growth in drug classes that account for greater spending in the 340B program than in the overall market ($10.4 billion of the increase), the CBO analysis indicated.

During the 11 years analyzed, the greatest differences in spending growth between the 340B program and the overall market were for cancer drugs (with the share of spending 20 percentage points higher, on average, for the 340B program than the overall market) and anti-infective drugs (8 percentage points higher, on average).

The report also analyzed drug purchases made through the 340B program in 2021 and found that three drug classes accounted for 70% of the $43.9 billion spent that year: cancer drugs ($18.1 billion, or 41%), anti-infective drugs ($6.6 billion, or 15%), and immunosuppressants ($6.2 billion, or 14%).

So what was responsible for the other two-thirds of the increase in 340B spending from 2010 through 2021?

The CBO suggested there were three contributing factors:

The integration of hospitals and off-site clinics, which increased the number of facilities eligible to participate in the program.
Enactment of the ACA in 2010, which also expanded facility participation.
A change to program guidance in 2010 that allowed hospitals to contract with multiple off-site pharmacies, increasing 340B drug spending at each participating facility.

Although the CBO was unable to quantify the effects of these factors because of insufficient data, in the agency’s estimation, the integration of hospitals and clinics was the largest contributor to increased spending.

Integration, for the purposes of the CBO report, included the acquisition or establishment of an off-site clinic — such as an infusion center or specialty medicine practice — by a hospital or health system.

When an off-site clinic’s services are consolidated with a 340B hospital’s services, the report noted, the practice is considered an off-site patient clinic of the hospital and becomes eligible to purchase drugs at 340B prices.

The CBO analysis found that the number of off-site outpatient clinics participating in the 340B program increased from approximately 6,100 to about 27,700 between 2013 and 2021. During that time, the share of hospitals with at least one off-site outpatient clinic increased from 50% to 76%.

As noted, the ACA also expanded participation in the program, both through the types of hospitals that are eligible and indirectly through Medicaid expansions.

Under the ACA, four additional types of hospitals became eligible: critical access hospitals, freestanding cancer centers, rural referral centers, and sole community hospitals. In 2021, approximately 6,900 facilities qualified under one of these four designations and accounted for around 6% of total spending ($2.6 billion) through the 340B program.

The guidance modification in 2010 that allowed hospitals to contract with an unlimited number of pharmacies resulted in an increase from around 2,000 contracted pharmacies that year to almost 130,000 in 2021. The proportion of 340B spending that occurred through contract pharmacies increased from 4% to 17% during that same period, according to the CBO.

The agency noted, though, that “at most, about 20% of 340B spending growth from 2010 to 2021 can be attributed to drugs dispensed by contract pharmacies,” and some of that growth was most likely due to shifts in the dispensing of 340B drugs from in-house pharmacies to contract pharmacies (as opposed to new spending).

Along with the release of the CBO report last week, two other 340B-related issues made the news.

The American Hospital Association sent a letter to the Federal Trade Commission and the Department of Justice requesting a formal antitrust investigation into what the lobby group referred to as a “potential ongoing antitrust conspiracy.”

The organization said the “coordinated imposition” of 340B rebate models by several large drug companies during the second half of last year may be anticompetitive activity and as such would be a violation of federal law.

Under most rebate models, instead of the standard practice of receiving upfront discount pricing for 340B drugs, hospitals would be required to purchase the drugs at full price and then submit documentation for rebates.

In May, a district court judge ruled against four drug companies that were suing the federal government for requiring them to obtain approval before implementing the rebate models. The judge, however, did not issue a declaration that the rebate models are prohibited by law.

In other news, 163 members of Congress signed a letter addressed to Secretary Robert Kennedy Jr. asking him to cancel the Rebate Model Pilot Program the Health Resources and Services Administration announced in July.

The voluntary pilot program is slated to start on Jan. 1, 2026, and will include the 10 drugs selected for negotiation under Medicare for 2026.

The lawmakers expressed concerns that the pilot will “severely damage” community health centers, safety-net hospitals, and other providers that rely on the 340B program to effectively serve their patients and communities.

If the Department of Health and Human Services chooses to move forward with the program, the lawmakers urged Kennedy “to proceed with the utmost caution and impose stronger guardrails to ensure the 340B program is not entirely dismantled.”

What else you need to know

Novartis agreed to pay approximately $1.4 billion to acquire Tourmaline Bio, a New York-based biopharmaceutical company that is developing an investigational anti-inflammatory therapy Pfizer once owned. Pacibekitug, a Phase III-ready monoclonal antibody, is being developed as a potential treatment for atherosclerotic cardiovascular disease (ASCVD). Dr. Shreeram Aradhye, president of development and chief medical officer at Novartis, said the drug “represents a potential breakthrough in addressing residual inflammatory risk in ASCVD with a differentiated mechanism of action targeting [interleukin-6].”

The boards of both companies have approved the acquisition, which is expected to close in the fourth quarter, pending customary approvals. At that time, Tourmaline shareholders will receive $48 per share in cash, a 59% premium to the stock’s closing price on the day before the acquisition was announced, and Tourmaline will become a Novartis subsidiary. Tourmaline licensed pacibekitug from Pfizer in 2022, and Pfizer remains eligible to receive substantial milestone payments, as well as royalties. Tourmaline has also been evaluating pacibekitug as a treatment for thyroid eye disease.

Kaiser Permanente and Reno, Nev.-based Renown Health have entered into a joint venture that will expand Kaiser’s footprint into northern Nevada. The joint venture is expected to close early next year if regulators approve it. Through the partnership, Kaiser and Renown will launch a multi-specialty ambulatory health system branded as Kaiser Permanente Nevada, with locations in central and northern Reno, including Renown Health’s existing Del Monte Senior Care Plus Clinic. They will also jointly own and operate a health plan under the Kaiser Permanente Nevada brand, building on Renown’s current insurance arm, Hometown Health, which currently offers employer-sponsored, ACA, and Medicare Advantage plans

Kaiser will acquire a majority interest in Hometown Health for an undisclosed sum, and Kaiser Permanente Nevada will start offering coverage during the 2026 open enrollment period. According to the announcement, Renown Health will continue to operate as an independent nonprofit health system and will continue to accept all current health plans. Serving Nevada, Lake Tahoe, and northeast California, Renown Health is the region’s largest, locally governed, not-for-profit academic health care network.

Memorial Hermann Health System, Northwell Health, Novant Health, Ohio State University Wexner Medical Center, and UPMC are among the seven health systems that participated recently in a $26 million funding round for Optain Health, a health care technology startup with headquarters in New York and Australia. The funding will be used to accelerate the global rollout of the company’s advanced robotic retinal imaging, artificial intelligence, and teleophthalmology platform, Optain said in a press release. Powered by oculomics — which Optain describes as “the science of using the eye as a window into whole-body health” — the platform uses a portable robotic camera to capture retinal images, without the need for pupil dilation. Integrated AI workflows evaluate the images to detect eye diseases, such as diabetic retinopathy, glaucoma, and age-related macular degeneration, and assess cardiovascular disease risk. Optain noted that its technology expands access to oculomics into primary care and optometry with minimal specialist staffing or workflow disruption.

Collectively, Optain said, the seven health systems that participated in the oversubscribed funding round deliver care to 28 million patients across 25 states. Each will begin deploying Optain’s platform across their networks. Optain was co-founded by Aegis Ventures, a venture capital firm that works with a consortium of health systems to co-develop health care AI startups.

Executive Moves

CVS Health’s care delivery division is undergoing some leadership changes, according to a social media post by Dr. Sreekanth Chaguturu, who leads the division. Subsidiary Signify Health will have a new president, with Marcus Lanznar taking over the role when Paymon Farazi steps down. In addition, Jon Thiboutot, who began his career at CVS as a pharmacist more than 20 years ago, has been named president of retail health, which includes MinuteClinics. Dr. Chaguturu did not say when the changes would take effect.

Mike Hulefeld, Ochsner Health’s president and COO, will step down at the end of this year, the New Orleans-based health system announced last week. He has held numerous roles at Ochsner over 27 years and will continue to be involved as a mentor to Ochsner’s up-and-coming leaders, according to the notice. Dr. Timothy Riddell, a family practice physician, will become executive vice president and chief operating officer when Hulefeld steps down. Dr. Riddell has served as chief medical officer for various regions of the health system and has been a member of the Ochsner group practice for nearly three decades.

Dr. Craig Albanese, Duke University Health System’s CEO, is leaving the Durham, N.C.-based organization to serve as president of integrated care and coverage at Kaiser Permanente. The California health system said in its announcement that Dr. Albanese would start his new role on Sept. 29. Dr. Albanese joined Duke in January 2022 as vice president and chief operating officer before being appointed as CEO in 2023. His previous leadership experience includes roles at NewYork-Presbyterian, Stanford Children’s Health, and University of California, San Francisco. Duke is conducting a national search for a new CEO, the Duke Chronicle reported.