Why Should a Plan Sponsor Care About the 340B Charity Program? With Shawn Gremminger

How the 340B Drug Discount Program Quietly Raises Costs for Self-Insured Employers. Episode 527. Why should a self-insured employer care about the 340B charity program? That's the single question Stacey Richter puts to Shawn Gremminger, president and CEO of the National Alliance of Healthcare Purchaser Coalitions, in this episode—and his answer traces four ways the $68 billion program quietly drives up what employers and plan sponsors pay for drugs and medical care. From supercharged hospital consolidation to disappearing PBM rebates, Gremminger lays out why 340B, once treated as a niche topic, now sits squarely at the center of the drug pricing debate. WHAT YOU'LL LEARN ✅ Why 340B—now the second-largest drug purchasing program in the country at roughly $68 billion a year—matters directly to self-insured employers, not just to pharma and hospitals ✅ How 340B-driven hospital consolidation pushes up prices for all services, not just drugs, since hospital spend typically makes up 55–58% of total employer health plan costs ✅ Why 340B hospitals tend to mark up drugs even more aggressively than non-340B hospitals, and why 340B clinics disproportionately prescribe higher-priced drugs over cheaper alternatives ✅ How the Inflation Reduction Act's drug price caps are reportedly pushing some 340B entities to nonmedically switch patients toward non-IRA, higher-margin drugs ✅ Why employers lose access to PBM-negotiated rebates entirely whenever a drug is purchased through the 340B channel instead of the traditional channel ✅ Why Shawn Gremminger argues employers, purchasers, and policymakers need to stop treating 340B as a separate, carved-out issue from the broader drug pricing debate WHY THIS MATTERS Hospital spend already makes up more than half of a typical self-insured employer's healthcare costs, and 340B's distortions—inflated markups, prescribing skewed toward higher-priced drugs, and vanishing rebates—flow straight into that spend. A recent study found that for every point increase in hospital prices, non-healthcare employers respond by cutting payroll and jobs for middle-class workers. As 340B has grown from a niche $5–10 billion program into a $68 billion one, treating it as someone else's problem is no longer an option for anyone trying to understand or control drug pricing. MENTIONED IN THIS EPISODE Article: Brian Reid's Cost Curve Weekend newsletter, on pharma-hospital data-requirement lawsuits LinkedIn Post by Peter Hayes Article: "Reforming 340B to Serve the Interests of Patients, Not Institutions," by Anthony DiGiorgio, DO, MHA Article: "How a Company Makes Millions Off a Hospital Program Meant to Help the Poor," New York Times EP448 (Part 1 and Part 2) with Shawn Gremminger: Apple Podcasts | Spotify | Other Apps Study: Zack Cooper, PhD, on rising healthcare prices driving unemployment and job losses LinkedIn Post by Shawn Gremminger === LINKS === 🔗 Show Notes with all mentioned links ✉️ Enjoy this podcast? Subscribe to the free weekly newsletter 🫙 Support the podcast with a small donation to the Tip Jar 🎤 Follow us on Apple Podcasts 🎤 Follow us on Spotify 📺 Subscribe to our YouTube channel === CONNECT WITH THE RHV TEAM === ✭ LinkedIn ✭ Threads ✭ Bluesky ✭ X 00:00 Introduction to this episode. 01:02 What the 340B charity program does in a nutshell. 02:01 A summary of what's happening right now around the 340B charity program. 08:39 The conversation with Shawn Gremminger. 09:28 Why should you care from a patient and consumer advocate perspective? 12:09 Why we're seeing distorted pricing at 340B hospitals. 13:26 What happens when a drug is purchased through a 340B channel rather than a traditional channel. 14:50 A recap of the distortions caused by 340B. 16:19 A clarification on the IRA. 19:07 Why you shouldn't take a side in the "blame game."