Key Takeaways:
- A Wall Street Journal report revealed abuse of the 340B hospital markup program is getting worse as hospitals and middlemen find new ways to profit off the program.
- The Trump administration is calling on companies to let patients and employers purchase medicines directly – and at a lower cost.
- PhRMA plans to build a search engine that will point patients to prescription medicine direct purchase programs (DPPs), independently set up by biopharmaceutical manufacturing companies.
This past March, a Wall Street Journal report revealed abuse of the 340B hospital markup program is getting worse as hospitals and middlemen find new ways to profit off the program. According to PhRMA, big, tax-exempt hospitals and clinics abuse a little-known federal program to buy medicines at steep discounts and charge patients whatever they want. Abuse of 340B has become so profitable that cottage industries of for-profit companies are increasingly finding new ways to siphon money out of the program. Pharmacy Benefit Managers (PBMs,) insurers, pharmacies, and providers are often owned by the same company. This kind of consolidation of multiple links in the supply chain is known as vertical integration, which can create financial incentives for middlemen to steer patients to preferred providers and pharmacies where they markup medicines to generate more profit.
Drug Channels reports that this year the three largest PBMs – Caremark (CVS Health), Express Scripts (Cigna), and Optum Rx (United Health Group) – have each excluded hundreds of drugs from their standard formularies. In fact, PhRMA says research shows that more than 1,400 medicines were excluded from commercials formularies in 2025 and this number has grown over the years with PBMs excluding an average of 27% more medicines each year.
While some employers think this “scheme” lowers their health care costs, industry experts say the opposite is true in the long run. PhRMA states that IQVIA estimates show that “revenue sharing” models will increase employer costs – by an average of 14% – due to multiple factors including increased medical care costs due to hospital markups.
Drew Voytal, senior director, Public Affairs & Strategic Initiatives, PhRMA, says, “To lower medicine costs, we need to fix real barriers like PBM markups and 340B misuse. Middlemen like PBMs, insurers, 340B providers and others in the United States pocket half of every dollar spent on brand medicines.”
These imbalances drive up costs for everyone. What is needed is to require PBMs to share savings directly with patients and reform misaligned incentives, fix the 340B hospital markup program, and force foreign governments to pay their fair share for cutting-edge innovation.
In response to the growing recognition that PBMs and other middlemen receive massive rebates on medicines while charging patients the full price and putting up barriers to access, the Trump administration is calling on companies to let patients and employers purchase medicines directly – and at a lower cost. Some manufacturers are responding by offering new direct purchase programs that are more convenient and can save patients time and money – no hidden markups or fees and transparent pricing for patients and businesses.
Voytal says PhRMA is responding by building a new website that will connect patients with manufacturer direct purchase programs. This search engine, AmericasMedicines.com will launch in January 2026. PhRMA plans to build a search engine that will point patients to prescription medicine direct purchase programs (DPPs), independently set up by biopharmaceutical manufacturing companies. AmericasMedicines.com will connect patients to DPPs where they can buy prescriptions directly from manufacturers as well as search the site’s 750-plus patient assistance resources. While pharmaceutical manufacturers must make their own decisions to offer DPP, this new website will allow manufacturers to list a wide range of medicines and connect patients directly to available options.
