Protecting 340B Allows Hospitals to Invest Millions in Children's Health

For children’s hospitals already operating on thin margins, the 340B Drug Pricing Program is a financial stabilizer.

And for the kids they serve, it’s a lifesaver.

The federal program enables safety-net hospitals to care for vulnerable patients, sustain critical services, and offset mounting uncompensated costs.

Drug discounts provided by 340B not only save the participating pediatric hospitals money on medications they also allow many hospitals to invest into community health initiatives every year.

What’s at stake

340B’s long‑standing structure of upfront drug discounts was in jeopardy due to a 2025 HHS proposal to switch to a rebate model. A federal appeals court issued a preliminary injunction in January, halting the rebate pilot program. The Trump administration then withdrew its appeal and vacated the pilot.

Despite the victory for children’s hospitals, HRSA issued a new request for information on the potential use of rebates on Feb. 13, indicating a possible restart of the administrative process for a new, modified proposal.

A 2025 Children’s Hospital Association assessment quantified what’s at stake. On average, a 340B children’s hospital can:

• Provide $272 million annually in community benefit, with some pediatric hospitals reporting impacts as high as $550 million a year for patients, families, and local communities.
• Offer $151 million per year in undercompensated care, with some hospitals reaching $335 million, helping cover care that is not fully reimbursed.
• Realize $39 million in annual savings through 340B participation, with some hospitals realizing savings up to $89 million each year, which are invested into essential services and community-based programs.

These figures, spotlighted in the new 340B fact sheet illustrate the case for 340B.

How 340B savings are used

More than half of children’s hospital patients are covered by Medicaid or CHIP, which often reimburse below the cost of care.

The 340B program helps participating hospitals close this gap and ensure children have access to lifesaving services that would be unsustainable without the ability to purchase outpatient drugs at a lower rate. These include high-cost, high-need areas such as:

• Cancer treatments
• Mental and behavioral health care
• Cell and gene therapies
• Specialty pharmacy services
• Workforce support
• Efforts to ensure access to affordable medications

From a financial perspective, 340B functions as a multiplier: drug savings are converted into expanded services, workforce stability, and community programs that would otherwise be scaled back or eliminated.

Why continued defense matters

While the recent decisions by the appellate court and administration represent a meaningful victory, they did not eliminate future threats to the federal program. Any efforts to restructure or restrict 340B could erode the financial foundation that allows children’s hospitals to care for the country’s most vulnerable patients.

As discussions about the program’s future continue, the financial evidence is clear: Defending 340B means protecting hundreds of millions of dollars that go directly into patient care and community health each year.

We’ll keep working with member hospitals to clearly demonstrate how changes to the program would translate into lost services, reduced access, and significant financial strain.

Share our latest 340B fact sheet with your members of Congress.