Colorado Patients are Paying the Price for 340B Abuse

Posted January 15, 2026

In May 2025, Gov. Jared Polis signed Senate Bill 71 into law, dramatically expanding Colorado’s participation in the 340B Drug Pricing Program by preventing any limitations on the number of pharmacies that can profit from the federal discount.

As a Latina health care advocate who has spent years fighting for affordable access to medications, I watched this happen with deep concern. Now, as a federal lawsuit challenging the law moves forward, Colorado patients — especially those in the state’s most vulnerable communities — are caught in the middle of a growing crisis.

Created by Congress in 1992, the 340B program requires drug manufacturers to offer significantly discounted outpatient drugs to safety-net hospitals and clinics so they can reduce prescription costs and improve services for low-income, uninsured and vulnerable populations. For communities like mine, this was supposed to be a lifeline. But more than three decades later, that promise has been broken — and the impact falls hardest on the patients who were supposed to benefit most.

Despite its good intentions, the 340B program has been turned into a source of massive, unchecked profit for large, tax-exempt hospital systems and powerful pharmacy benefit managers. This means higher costs, less transparency and limited access for Coloradans.

Since its inception, the 340B program has grown exponentially. Congressional Budget Office analysis shows that 340B spending rose from $6.6 billion in 2010 to approximately $70 billion in 2023. Over that same period, spending on brand-name drugs across the rest of the market grew 4% annually. 340B-covered entity purchases now exceed Medicaid spending on prescription drugs, which hit an estimated $51 billion in 2023.

Vertically integrated health companies, like CVS Health and other large chain pharmacy networks, are driving this furious growth. Today, more than 32,000 pharmacy locations — nearly 60% of the entire U.S. pharmacy industry — function as contract pharmacies for 340B covered entities. In Colorado, 68 hospitals and 28 federally qualified health centers participate in the program, but they contract with more than 2,500 pharmacies, including out-of-state centers.

The problem is that large hospital networks and multi-billion-dollar pharmacy chains are not passing the 340B savings directly to patients. Instead, they purchase drugs at the discounted 340B price from manufacturers and then bill patients and their insurers the full commercial price.

The New York Times reported on a woman in neighboring New Mexico whose hospital bought her cancer drugs for just $2,700 using a 340B discount, yet billed her insurer $22,700. After the insurance company paid $10,000, the patient was still charged $5,000 out-of-pocket.

A Milliman study analyzing commercial and Medicare outpatient drug spending found that 340B hospitals, on average, bill all patients nearly four times more for medicine than non-340B hospitals. The cost disparity is greater for Hispanic Medicare patients, who are billed up to five times more.

The 340B program also incentivizes hospitals to favor higher-cost drugs, as the deep discount on expensive specialty medications yields much larger profit margins than generic options. Studies confirm that 340B hospitals prescribe brand-name drugs at higher rates.

Colorado patients and employers should expect these markups, high out-of-pocket charges, and incentives for higher-cost drugs to intensify as SB-71 ensures these practices will continue and the network of profiting contract pharmacies expands.

A 2025 IQVIA study found that the 340B program caused Colorado employers to lose an estimated $152 million in rebates in 2023, equating to about $45 per beneficiary. This occurs because the program’s discounted drugs displace the rebates that commercial plans and employers typically receive, increasing overall drug spending. The same study found that SB-71 will increase costs for Colorado employers by an estimated $23 million annually due to further lost rebates.

The good news is that Congress is finally taking action. Sen. John Hickenlooper has been working with colleagues on both sides of the aisle on the Senate HELP Committee to investigate 340B abuses and advance bipartisan reforms. This critical work has raised national awareness and built momentum for meaningful change.

Federal reforms offer the best solution, but if the courts do not ensure more accountability for the 340B program, Colorado’s legislature must act. Any serious 340B reform effort should include transparency requirements, patient protections, reasonable limits on contract pharmacy arrangements, and accountability mechanisms.

Our collective health and shared future are at stake. The misapplication of this program inflicts harm on communities across Colorado and the country, with devastating and disproportionate consequences for the vulnerable populations it was meant to protect.

It is time to rescue this program from abuse and restore its original promise.

Amy Hinojosa is the president and CEO of MANA, a national Latina organization with local chapters in Denver and Colorado Springs. This commentary is republished from Colorado Newsline under a Creative Commons license.