340B hospitals among those that provide lowest levels of community benefit across the country

The 340B program reached $38 billion in sales at the discounted price in 2020. This is a 27% increase over sales in 2019, and the program is now more than four times the size it was in 2014. Unfortunately, despite pharmaceutical manufacturers paying more and more money in 340B discounts, there is no evidence that this growth in 340B translates into lower costs for patients taking prescription medicines.

Case in point: A new hospital index released by the Lown Institute found that “72% of private nonprofit hospitals had a fair share deficit, meaning they spent less on charity care and community investment than they received in tax breaks.” All 10 hospitals that spend the least on charity care and community investment compared to the value of their tax exemptions, according to this new analysis, are 340B hospitals. There is a big disconnect if hospitals participating in 340B – a program intended to be a safety-net program – are also providing the lowest levels of charity care to our communities while benefiting from both the 340B program and tax breaks.

Part of the problem is that the hospitals that participate in the 340B program have no requirements to use revenue from 340B to help needy patients afford their medicines. In fact, both the Government Accountability Office and Office of Inspector General have found that 340B hospitals often charge uninsured patients the full price for medicines for which the hospital received a 340B discount. And despite a broad range of stakeholders raising concerns that patients are not always benefiting, the Health Resources and Services Administration (HRSA) has not created a clearer definition of a 340B patient to ensure hospitals more accurately identify patients for whom 340B discounts apply. HRSA has also shied away from holding 340B covered entities accountable or penalizing them – sometimes even failing to enforce basic eligibility requirements. This just makes matters worse. The agency is essentially turning a blind eye, letting 340B covered entities profit from 340B without ensuring they meet basic program standards – all at the expense of patients who could benefit from manufacturers’ steeply discounted medicines.

If a typical government program’s budget ballooned by a factor of four in six years, we would expect to see some accountability into how that money was being used and some evidence that people were benefiting from the spending. Unfortunately, with 340B, none of those things happen. While some 340B covered entities are true safety-net facilities and reinvest the money into care for vulnerable populations, many are not. In fact, we also see a concerning number of 340B hospitals that engage in aggressive debt collection practices or use excess revenue to expand overseas while continuing to reap profits from 340B. Take a look at this recent analysis by Johns Hopkins featured by AXIOS, which compiled some alarming data about the number of hospitals in the United States that use predatory billing practices – many of which are 340B hospitals.

The archaic rules of the 340B program do not ensure that it serves the vulnerable patients it was intended to help. It no longer even resembles a true safety-net program. That’s a problem, but not an unsolvable one. We need accountability and transparency in 340B to help shift the focus of this program back toward patients.

Learn more at PhRMA.org/340B.