A mother in Newark rushes her feverish child to the emergency department in the middle of the night. A restaurant worker in New Brunswick seeks reassurance after finding a lump on her breast. In South Jersey, a veteran in Camden struggling with a psychiatric crisis, and a farmer in Cumberland County grappling with unexplained pain, find compassion and comfort at their local hospitals. None of them have insurance. All of them receive care.
This is the American safety net in action. And in New Jersey, it is sustained in critical part by the 340B Drug Pricing Program.
Established by Congress in 1992, the 340B program requires drug manufacturers — as a condition of participating in Medicaid — to sell outpatient medications to qualifying hospitals and health centers at significantly reduced prices. Covered entities typically save between 25 and 50% on pharmaceutical purchases.
Let us be clear about what this is not: a handout.
It is a congressionally mandated obligation — a reasonable and proportionate contribution from an enormously profitable industry — in exchange for privileged access to the world’s largest government-administered insurance markets. The program does not cap manufacturer profits. It does not restrict pricing to private payers. It asks, simply, that hospitals serving the most vulnerable patients pay less for the medicines those patients need.
New Jersey’s 340B hospitals serve communities where poverty rates are high and health outcomes fall far behind wealthier parts of the state — in some cases, life expectancy differs by more than 20 years between the poorest and most affluent zip codes.
In Trenton, Paterson, Elizabeth, and Atlantic City, these are often the only institutions standing between a patient in crisis and no care at all. The savings generated by 340B are reinvested directly into those communities — funding uncompensated care, behavioral health services, mobile health units, medication assistance programs, and language access services for the state’s diverse immigrant population. These are vital programs. But when 340B revenue is threatened, they could be among the first cuts.
The pharmaceutical industry has waged a sustained legal and lobbying campaign to weaken 340B. They have argued before courts, Congress, and state legislatures that the program has been “misused” and that manufacturers should have the right to restrict which pharmacies can dispense 340B drugs and even to dictate which patients qualify by demanding hospitals turn over granular claims data as a precondition for receiving discounts Congress already requires them to provide.
This week, Eli Lilly is taking that campaign to its extreme with its plan to cut off federally mandated 340B discounts to hospitals, nearly 1,000 nationwide, that have not surrendered detailed pharmacy and medical claims data on their patients.
Drug manufacturers are not being asked to operate at a loss. They are not being asked to forgo innovation. They are not being asked to deliver care or services without assurance of reimbursement. They are being asked to honor a legal obligation they agreed to.
The global pharmaceutical market reached approximately $1.6 trillion in 2023. According to the American Hospital Association, 340B discounts to hospitals that year amounted to roughly 3.1% of the industry’s global revenues and just 7% of their U.S. revenues. An industry generating those returns can sustain a discount program for safety-net hospitals.
The consequences of constraining 340B are not theoretical. When manufacturers began unilaterally restricting contract pharmacy arrangements in 2020, the Health Resources and Services Administration estimated that covered entities were charged at least $470 million above the 340B ceiling price in 2022 alone due to those restrictions. New Jersey hospitals reported immediate and material losses in program savings. A full rollback would force an impossible choice: cut services to uninsured and underinsured patients or absorb losses that threaten long-term financial survival. In either case, the casualties are the patients of Newark, Camden, Cumberland County, and New Brunswick.
New Jersey’s congressional delegation and state lawmakers have both the opportunity and the responsibility to act. We ask them to:
- Oppose any federal legislation that would allow manufacturers to unilaterally restrict 340B access, including limits on the contract pharmacy arrangements safety-net hospitals depend on, and demands — like the one Eli Lilly is now enforcing — that hospitals hand over detailed patient claims data as the price of receiving discounts Congress already requires manufacturers to provide.
- Press the Department of Health and Human Services and the Health Resources and Services Administration to act now on Eli Lilly’s claims data ultimatum and to bring the same enforcement resolve to drug manufacturers that this Administration has shown elsewhere in the fight against price gouging. Regulators had months of warning. They no longer have the excuse of surprise.
- Support robust HRSA enforcement of the 340B statute, with meaningful penalties for any manufacturer — Lilly included — that imposes unlawful restrictions. And
- Reject the pharmaceutical industry’s framing of this as a misuse problem — demand evidence-based debate, not industry-funded narrative.
Better yet: Visit a 340B hospital in your district. Walk the emergency department at 3 a.m. Meet the patients. See the heroic teams fighting for their community members. Then decide.
The 340B program is not perfect. No federal program is. But its core premise is sound and just: Pharmaceutical manufacturers — enriched by government-funded research and government-administered insurance markets — should bear a proportionate obligation to the patients and providers at the bottom of the economic ladder.
New Jersey’s safety-net hospitals are open 24 hours a day, 365 days a year. They do not turn patients away based on insurance status or ability to pay. They absorb losses that would bankrupt private businesses. They provide services that no other entity in their communities offers. They do this, in part, because 340B makes it financially possible.
Protecting 340B is not a favor to hospitals. It is an obligation to patients. New Jersey’s policymakers have the power to make that clear — consistently and without equivocation.
Cathy Bennett is the CEO of the New Jersey Hospital Association, a trade association serving 400 hospitals, health systems and post-acute care providers across the state.
