The 340B drug discount program grew to an eye-popping $100 billion in drug sales in 2025, making it the largest government program most people have never heard of.

Enacted under the Public Health Service Act to require drug manufacturers to provide outpatient drugs at steep discounts to safety-net hospitals serving low-income patients, 340B has metastasized into a massive revenue engine for big nonprofit hospital systems. They use it to pocket billions in discounts that are not passed on to patients, while billing employers and taxpayers the full price that they don’t have to pay. It’s become a massive scam, and one of the principal ways notionally “nonprofit” hospitals rack up massive tax-exempt profits.