Peter Mihalick, health policy and advocacy director for the International Hearing Society and a former congressional staffer, discussed the federal 340B drug discount program on a recent episode of the Health Policy Podcast, highlighting concerns about its rapid expansion and lack of oversight.

Mihalick explained that the program was originally designed to help safety-net providers serve low-income patients by allowing them to purchase outpatient drugs at steep discounts. However, he said the structure does not require hospitals or clinics to pass those savings directly to patients, raising questions about whether the program is meeting its intended goals.

The discussion focused on how large hospital systems can generate significant revenue through the program, while patients may still face high out-of-pocket costs for medications. Mihalick also pointed to the growing role of contract pharmacies and the complexity of drug pricing flows as barriers to transparency and accountability.

He noted that recent policy efforts, including provisions tied to the Inflation Reduction Act and regulatory actions, aim to increase transparency, but may not address underlying structural issues. Mihalick said reforms such as clearer definitions, stronger guardrails, and mechanisms to ensure patients benefit directly from discounts could help realign the program with its original purpose.