The 340B drug pricing program allows qualifying healthcare providers to purchase prescription medications from pharmaceutical companies at discounted prices. When federal lawmakers established the 340B program in 1992, it covered approximately 200 public hospitals and federally qualified health centers. When the Affordable Care Act took effect in 2010, eligibility broadened to include certain rural hospitals, children’s hospitals, disease-specific treatment programs, and hospitals serving a significant share of low-income patients.
Program Scope and Savings
Today, a majority of Minnesota’s hospitals participate in 340B. Per the Minnesota Department of Health’s latest 340B Covered Entity Report, Minnesota’s participating hospitals made $1.34 billion from the program in 2024. At smaller hospitals like Winona Health, those savings can fill gaps left by Medicaid and Medicare reimbursements, which often don’t cover the full cost of providing care. Winona Health CEO Rachelle Schultz noted that “hospitals who participate in 340B are able to provide ongoing support and resources to services that are often financially draining, such as labor and delivery, behavioral health, dialysis and other important services to rural community members.”
Contract Pharmacy Issues
A point of contention is the use of contract pharmacies. In 2010, the Health Resources & Services Administration lifted a one-pharmacy restriction, allowing 340B program participants to contract with multiple pharmacies. Over the next seven years, the number of pharmacies contracted with 340B providers nationwide grew from 1,300 to almost 20,000. According to a June 2018 U.S. Government Accountability Office study, there are “weaknesses in HRSA’s oversight that impede its ability to ensure compliance with 340B Program requirements at contract pharmacies.” Some pharmacies charge healthcare providers large fees for 340B work, which can reduce the provider’s savings on drug prices.
Minnesota Legislation
Minnesota law currently bars drug manufacturers from restricting 340B drug deliveries to contract pharmacies, but this law expires in July 2027. Legislation (SF 3769/HF 3609) would keep that prohibition in place without an expiration date and give the Minnesota attorney general power to enforce violations as “an unfair or deceptive trade practice.” The Senate version already passed, with less than two weeks left in the 2026 regular session. Earlier this year, Minnesota’s current 340B enforcement law survived a legal challenge, though a federal judge struck down a similar law in North Dakota in 2026.
This article is an AI-assisted summary. All facts and figures are drawn from the original report: https://www.duluthnewstribune.com/health/what-is-340b-and-why-does-it-matter-for-minnesota-hospitals