Here’s a shocking truth: a drug discount program designed to help low-income patients is now under fire from the very institutions it was meant to support. But here’s where it gets controversial—OHSU’s president, Dr. Shereef Elnahal, is sounding the alarm on a pilot program initiated under the Trump administration, claiming it could jeopardize the financial stability of safety-net hospitals and, by extension, the care of vulnerable patients.
The program in question is the 340B Drug Discount program, a decades-old initiative that allows hospitals and clinics serving large numbers of low-income, uninsured, or Medicaid patients to purchase outpatient medications at steeply discounted rates. These providers then bill insurers at regular prices, using the savings to fund free or reduced-cost care. And this is the part most people miss—while the program has been a lifeline for many, its latest iteration, the 340B Rebate Model Pilot Program, flips the script entirely.
Instead of receiving discounted drug prices upfront, hospitals and clinics would now have to pay the full list price and apply for a rebate later. This means they’d essentially have to front the cost of expensive medications, waiting for repayment. For institutions like OHSU, which earned $480 million from the 340B program in the fiscal year ending June 2025, this change could create a significant cash-flow risk, potentially disrupting their ability to serve those who need it most.
Federal officials argue that the pilot aims to test the fairness and transparency of a rebate system while addressing concerns from both hospitals and drug manufacturers. Eight pharmaceutical companies have voluntarily joined the pilot, which will run for one year starting January 1, focusing on nine high-cost medications like Jardiance, Enbrel, and Eliquis. But critics, including Dr. Elnahal, worry that the administrative burden and financial strain could outweigh any potential benefits.
Here’s the kicker: while the 340B program has grown exponentially—from $12 billion in 2015 to $66 billion in 2023—some argue it’s strayed from its original mission. Drugmakers and certain lawmakers claim large hospital systems are profiting without always proving how patients benefit. Supporters, however, counter that this growth mirrors broader changes in healthcare, such as expanded Medicaid enrollment and hospitals reaching into underserved areas.
Studies have shown that the program’s expansion has contributed to higher healthcare costs for employers, government programs, and taxpayers, sparking calls for greater oversight. But is this pilot program the solution, or does it risk dismantling a system that, despite its flaws, has been a critical safety net for millions?
What do you think? Is the 340B Rebate Model Pilot Program a necessary reform, or does it pose an unacceptable risk to the very patients it’s meant to protect? Let’s start a conversation—share your thoughts in the comments below.