Minnesota recently released its second annual 340B Covered Entity Report. Under state law, Minnesota hospitals and federal grantees participating in the 340B Drug Pricing Program (known as “covered entities”) must annually report specific 340B-related data to the Minnesota Department of Health that is then included in a report to the state legislature. This latest report describes 340B profits generated and 340B operational costs as reported by Minnesota covered entities in 2024.
How much 340B net revenue did Minnesota providers generate in 2024?
Minnesota found that participants collected $3.04 billion in reimbursement on 340B prescriptions that cost them a total of $1.53 billion to acquire. After accounting for reported operating costs, this yielded 340B profits of $1.34 billion in 2024. The difference between the discounted price covered entities paid to obtain 340B drugs, and the reimbursements they received from payers and patients represents an almost 100% drug mark-up.
Three things to know:
I. Who profits the most from 340B in Minnesota?
Large hospitals profit the most from 340B – while providing comparatively low rates of charity care.
- Minnesota’s largest hospitals generated 80% of statewide 340B profits, while only representing 12% of covered entities. The top 10% of “disproportionate share hospitals” (DSH) – general acute care hospitals – obtained between $100 million and $335 million in 340B profits each.
- In contrast, “Safety Net Federal Grantees,” including federally qualified health centers (FQHCs), FQHC-lookalikes, and tribal health centers, were more than 10% of covered entities but generated less than 1% of statewide 340B profits.
- Minnesota 340B hospitals provide charity care at a rate of only 0.94% of their total operating expenses, which is below the national average of 2.15%.
II. How much 340B revenue is paid to contract pharmacies, PBMs and outside administrators?
Covered entities reported $165 million in expenses to operate their 340B programs. That is roughly 5% of the total 340B revenues collected in MN.
- Of that, $120 million flowed directly to contract pharmacies, while $17 million went to other external organizations, including third-party administrators (TPAs).
- For every $100 of 340B revenue collected in Minnesota, approximately $10 is diverted to these external organizations. Nearly half of the outpatient pharmacies Minnesota 340B participants contracted with were located outside the state.
- Among DSH hospitals, contract pharmacy fees represent 77% of reported operational costs, while grantees spent far less on contract pharmacy fees.
III. Does the $1.34 billion figure in the report account for all 340B profits in Minnesota?
No. The report acknowledges that $1.34 billion remains an underestimate, as covered entities did not fully report 340B data for office-administered drugs.
- The report also does not indicate how much 340B profit – if any – is shared directly with underserved patients in Minnesota to reduce their prescription drug costs.
The bottom line:
This year’s Minnesota Department of Health report provides increased transparency for understanding some of the impacts of 340B.
The report underscores the reality that large hospital systems generate significant profits from 340B while continuing to provide low levels of charity care to patients. Johnson & Johnson supports the original intent of the 340B Program and continues to advocate for federal reforms to 340B that increase transparency to ensure patients benefit more directly from the Program through lower costs on their prescription drugs.
Unfortunately, bills under consideration in several states, including Washington (SB 5981) Michigan (HB 4878) and New York (S 1913 and A 6222) include contract pharmacy mandates that would entrench abuses of the program and prevent data collection. Other states should follow Minnesota’s lead and provide more transparency in 340B. Lawmakers should demand transparency, prevent duplicate discounts, protect independent providers and ensure the program benefits patients, not just large hospitals, pharmacy benefit managers (PBMs) and pharmacy chains.
© Johnson & Johnson and its affiliates 2026 03/26 cp-570300v1