As the country presses on through the third week of a government shutdown, Senate Democrats continue to kick and scream about expiring pandemic-era healthcare subsidies that were passed in 2021. Despite the U.S. being many years removed from the global disease outbreak, Chuck Schumer is equating returning to pre-2021 Obamacare as “literally life or death.”
While Democrats are melodramatically arguing to expand the country’s “Healthcare Industrial Complex,” Republicans are exploring opportunities to rein it in. On Thursday, the Senate Health, Education, Labor, and Pensions (HELP) Committee is holding a hearing to investigate how a federal drug discount program has ballooned from $6.6 billion to nearly $44 billion in just 12 years.
Kudos to Chairman Bill Cassidy for not sitting on his hands during the shutdown.
The 340B Drug Pricing Program was established in 1992 by Congress to help hospitals serve low-income communities. More specifically, the federal government guarantees that eligible medical facilities get access to cheap prescription drugs in hopes that the savings will be passed down to patients in need. But despite average discounts of 45 percent, there’s reason to believe the money is going elsewhere.
Since the program’s inception, the number of 340B eligible hospitals has exploded by 60-fold while spending on prescription drugs through the initiative has risen sharply. Just in the last 12 years, 340B drug purchases have climbed by an annual average of 19 percent—amounting to an increase of more than $35 billion over that period. The acceleration begs the question: Why are so many medical institutions jumping into bed with Uncle Sam?
A lack of transparency and federal oversight has left a gaping loophole for hospitals to take advantage of. These organizations have the opportunity to access discounted drugs but subsequently sell them at marked-up prices—leaving room to make a quick buck, or million, from the government-sanctioned scheme. Tellingly, rather than helping to curb costs for low-income patients, a 2025 study from Magnolia Market Access finds that one-third of 340B savings are directed to hospital financial portfolios.
That aligns with a new analysis from my organization, the Job Creators Network (JCN), that reveals hospitals participating in the 340B program are holding billions of dollars in offshore accounts. An examination of tax records finds that roughly 50 institutions across six states have more than $17 billion stashed in places ranging from the Caribbean to Eastern Europe.
American companies operating in the free market can—and should—capitalize on opportunities to better position themselves financially. These types of incentives are what drive economic growth and innovation. But, at the same time, policymakers have a responsibility to ensure that government programs don’t unintentionally create a counterproductive mess.
In this case, the status quo is backfiring on small businesses. The 340B program's bloat and exploding expenditures are propping up high healthcare and prescription drug prices across the board, financial strain that small businesses are forced to shoulder. As medical costs continue to rise, small employers—which are responsible for nearly half the country’s workforce—are struggling to sponsor coverage for staff.
The Trump administration is already moving on the issue. The Department of Health and Human Services is launching a pilot program that creates a system of after-the-fact rebates for 340B hospitals as opposed to upfront discounts. The change is expected to cut down on program abuse and encourage more transparency. But there is only so much the executive branch can do alone without the help of Congress.
As the government shutdown drags on, Democrats are wanting to continue feeding a growing government-supported healthcare monster that is inflating costs for patients and small businesses. Hopefully, Sen. Bill Cassidy’s committee hearing on Thursday can generate momentum for reform in the other direction. The healthcare status quo is clearly not working.
Alfredo Ortiz is the CEO of the Job Creators Network, author of “The Real Race Revolutionaries,” and co-host of the Main Street Matters podcast.
