340B sales go up, free or reduced-cost care offered at hospitals goes down

Is the growth of the 340B Drug Pricing Program leading to greater hospital investment in free or reduced-cost care for eligible patients? The answer is a resounding no. Data shows that as the federal program has expanded at a rapid pace, spending on charity care by some of the nation’s most profitable hospitals has remained flat and abysmal.

Background: The 340B program provides covered hospitals with steeply discounted pricing on prescription medicines, which averages nearly 60% off the list price, or more for some medicines. Hospitals are expected to use the profits they generate through the program to improve access to affordable medicines and increase their investments in charity care, meaning free or reduced-cost health care for low-income or uninsured patients.

Yes, but: There are no requirements for how hospitals use these program profits. As hospitals buy more medicines at heavily discounted prices and the size of 340B continues to surge, many 340B hospitals are spending less than ever before on charity care. The program has instead become a lucrative profit stream for many hospitals with little evidence that underserved patients are benefiting, highlighting the need for policymakers to step in and ensure the program helps these patients.

And that’s not all. Due to loose program requirements, there are warped, misguided results in the program:

• For every $10 the most profitable 340B hospitals collect in profit, just $1 is invested in charity care.
• 69% of disproportionate share hospitals that participate in 340B provide less charity care than the national average for all hospitals.
• 340B hospitals collect seven times as much as independent physician offices from the sale of medicines administered to commercially insured patients.
• The average cost per prescription for commercially insured patients is 150% higher at 340B hospitals than at non-340B hospitals.

Congress created the 340B program to help vulnerable patients gain access to affordable prescription medicines. But too often the program puts the interests of profitable hospitals before these patients. Fortunately, policymakers are starting to take notice and have put forward comprehensive program reforms. We hope to see these reforms become reality to get 340B back on track and working for patients.