Two leading voices in the hospital sector are offering sharply different perspectives on the implications of an April 15 executive order issued by President Donald Trump aimed at reducing drug prices, particularly through changes to the 340B drug pricing program.
The 340B program is a cornerstone for many community-based hospitals and health systems, enabling them to stretch limited resources and provide essential care to uninsured and underinsured patients.
The executive order, titled “Lowering Drug Prices By Once Again Putting Americans First,” reintroduces and reinforces a policy from the Trump administration’s first term that adjusts Medicare outpatient hospital drug payments to reflect 340B drug discounts. The aim is to lower patient cost sharing and bring more accountability to drug pricing in the Medicare program.
Chip Kahn, president and CEO of the Federation of American Hospitals, welcomed the executive order, describing it as “an important step forward.”
“The EO embraces the first term policy to adjust Medicare outpatient hospital drug payments for the deep 340B discounts,” Mr. Khan said in an April 16 statement shared with Becker’s. “This EO remedies process issues that sidetracked the initiative previously. So, beneficiaries will see lower drug cost sharing while fairness of drug payment will increase.”
On the other side of the fence, Bruce Siegel, MD, president and CEO of America’s Essential Hospitals, raised concern over the potential impact of the order on vulnerable populations and the hospitals that serve them.
“The 340B program helps hardworking, low-income Americans access needed medications at affordable prices, and essential hospitals depend on 340B savings to meet their mission,” Dr. Siegel said in a statement. “Drastically reducing Medicare payments to 340B hospitals would counter the order’s motive to ‘significantly reduce drug prices for American patients’ and threaten access to care.”
Adding to the national conversation, Lisa Kidder Hrobsky, senior vice president of advocacy and political affairs at the American Hospital Association, expressed appreciation for the administration’s focus on rising drug prices — but warned against the broader policy implications tied to site-neutral payment reforms and cuts to 340B hospitals.
“As major purchasers of drugs for patient care, hospitals and health systems have strained under their rising prices,” Ms. Hrobsky said. “However, we continue to strongly oppose site-neutral policies that do not account for the unique circumstances of providing care in the hospital outpatient setting, where patients are demonstrably sicker and require more complex care.
“Finally, 340B is an essential program that helps hospitals advance health in communities across the country. We will work closely with the administration to convey the critical role 340B plays for patients and communities, especially those in rural and other medically underserved areas.”
The contrasting views highlight a broader policy divide in the hospital field: while some leaders see changes to the 340B program as a long-overdue correction to enhance financial accountability, others warn it could destabilize already fragile hospitals that rely on the program to sustain essential services.
For systems like Franciscan Missionaries of Our Lady Health System, a 10-hospital network based in Baton Rouge, La., 340B is more than a cost-saving tool — it’s a financial lifeline.
“It’s a program we’ve continued to take advantage of to support the costs we incur and don’t get reimbursed for — the uninsured and underinsured within our community,” Michael Gleason, executive vice president and CFO of the health system, said during an episode of the Becker’s CFO and Revenue Cycle Podcast. “It’s worth approximately $150 million annually to our organization and has continued to grow at double-digit percentage rates over the last several years.”
Established in 1992, the 340B program allows eligible hospitals and clinics serving low-income populations to purchase certain outpatient drugs at a discount of 25% to 50% off the standard price. Many hospitals see the program as a vital financial support as well as a critical lever for improving access and care delivery.
As the executive order moves toward implementation, its long-term effects on hospital operations, patient access and drug affordability remain uncertain — and are likely to continue fueling debate among hospital leaders.
