Recent studies add to the growing body of evidence questioning the value of the current 340B program and whether it’s benefiting patients as Congress intended.
The first recent study shows that while nonprofit hospitals saw substantial growth in profits between 2012 and 2019, there were no corresponding increases in their level of charity care. Majority of these hospitals participate in the 340B program, which was designed to help provide low-income and vulnerable patients with access to affordable medicines. The study’s conclusion is not surprising given nonprofit hospitals’ track record of exploiting the 340B program to rake in profits without using the money to help lower patient out-of-pocket costs for medicines. Some hospital chains take this a step further — instituting explicit policies to deny patients access to care despite bringing in record profits and avoiding millions in taxes due to their nonprofit status. Just last month, the New York Times reported a nonprofit hospital withheld care from patients with unpaid medical bills.
A second study confirms what has long been suspected — that perverse financial incentives in the program are leading 340B hospitals to increase their commercially insured patient population to generate more program profits. According to the study, hospitals that recently joined the 340B program were more likely to have higher spending in commercial insurance costs for oncology medicines as compared to similar hospitals outside of the program. We already knew from another recent study that median price markups for cancer therapies administered to patients with commercial insurance ranged from 118.4% to 633.6% more than what it cost the hospitals to acquire the medicines. And other studies have shown a trend of 340B hospitals expanding into more affluent communities where the rates of commercially insured patients are higher. Taken together, there is clear evidence of 340B hospitals manipulating the program to increase their profits.
Without increased oversight and meaningful, comprehensive reforms from Congress, patients will continue to be left behind while nonprofit hospitals game the system.
Learn more at PhRMA.org/340B.
Nicole Longo
Nicole Longo is Deputy Vice President of public affairs at PhRMA focusing on Medicare, 340B, importation and more. She previously worked for a D.C.-based public affairs firm where she assisted a wide range of clients with communications efforts on everything from trade policy to agriculture policy to health care policy. Outside the office, Nicole can be found trying new restaurants (usually Italian), taking an occasional barre class and cheering on the Cincinnati Bengals.
Nicole Longo