The Hidden Costs of the 340B Program: Why Small Businesses Need Transparency Now

By SBE Council at 16 April, 2026, 11:27 am

By Karen Kerrigan -

For small businesses, rising healthcare costs remain one of the most persistent and difficult challenges to manage. Premiums continue to climb, coverage becomes harder to sustain, and employers are left asking a simple question: What is actually driving these increases, and why can't I control them?

One area receiving increasing attention among employers and healthcare purchases is the federal 340B Drug Pricing Program. While the program was established with the important goal of supporting access to care for vulnerable populations, some stakeholders have raised concerns that its current structure may be contributing to higher costs for employer-sponsored health plans, including those serving small businesses. A new tool from the National Alliance of Healthcare Purchaser Coalitions is helping to shed light on this issue. Their newly released 340B Employer Cost Impact Calculator provides something that has long been missing in healthcare: transparency.

A Program with Good Intentions, But Growing Consequences and Costs

The 340B Program allows certain hospitals and providers to purchase outpatient drugs at discounted prices. Over time, the program has grown significantly in both scale and scope.

As the program has evolved, employers and other purchases have pointed to several dynamics that warrant closer examination:

● Lost manufacturer rebates that would otherwise lower employer costs

● Market consolidation, as hospitals acquire physician practices to expand 340B eligibility

● Site-of-care shifts, moving treatments to higher-cost hospital settings

● Incentives to prescribe more expensive drugs and fewer lower-cost biosimilars

● Higher reimbursement rates at hospital-owned facilities

The result? Higher overall healthcare spending for employers without clear savings for patients or plan sponsors.

Disproportionate Impact on Small Businesses

These dynamics can be particularly challenging for small employers. Unlike large corporations, smaller businesses often have:

● Limited negotiating power, making it harder to offset inefficiencies in the system

● Less visibility into cost drivers, which constrains informed decision-making

As a result:

● Rising healthcare costs directly impact wages, hiring, and investment decisions, as well as the ability of small businesses to continue offering health insurance as a benefit

A Tool to Quantify the Impact

The new 340B Employer Cost Impact Calculator is designed to change that. The tool allows employers and healthcare purchasers to estimate the financial impact of 340B program dynamics using company-specific, real-time inputs. Importantly, it translates a complex policy issue into clear, actionable numbers.

Employers can quickly see:

● Estimated additional cost per covered life

● Estimated total annual employer burden tied to 340B dynamics

All estimates are grounded in publicly available research, government data, and national benchmarks, making the results both credible and accessible.

As National Alliance President and CEO Shawn Gremminger explains:

"Employers deserve transparency about how the hidden costs of the program affect their health plans and their people. This calculator gives purchasers the clarity they need to understand the impact and drive more informed, value-based decisions."

Turning Transparency into Action

Tools like this calculator are critical because they empower employers - and especially small businesses - to move from frustration to understanding.

With better data, small business owners can be better advocates and policymakers can:

● Identify hidden cost drivers within health plans

● Advocate for greater accountability and transparency in federal programs

● Push for reforms that ensure savings are actually passed through to patients and employers

● Make more informed decisions about plan design and purchasing strategies

The 340B program plays an important role in supporting healthcare access. But as is the case with many large federal programs, its evolution has introduced unintended consequences that ripple through the system.

For small businesses already navigating tight margins and rising costs, those consequences matter. Transparency is the first step toward reform and the 340B Employer Cost Impact Calculator is an important step in that direction.

Call to Action

If you are a small business owner, it's always important to understand cost drivers and hidden costs. The survival and competitive position of your business depend on this knowledge. The same is true with healthcare costs. Explore the calculator, run your numbers, and share the results with SBE Council and your members of Congress. The insights will help SBE Council more effectively advocate for reforms, and create momentum for policy solutions in the Congress that reduce costs.

Karen Kerrigan is President & CEO of the Small Business & Entrepreneurship Council