The stadium names are visible. How 340B profits are spent is not.
As football season kicks off, fans across the country will see the names of hospitals and health systems displayed prominently on stadiums and arenas. Headlines about non-profit hospital spending on purchases that have no direct patient impact – like stadium naming rights – raise broader questions about how these hospitals allocate financial resources.
Those questions are especially relevant in the 340B program, where hospitals generate significant revenues from discounted medicines but face limited requirements to report how those funds are used or whether they directly benefit patients.
It’s time to ask, if patients aren’t benefiting, where’s the money going?
Running up the score: Congress created the 340B program in 1992 to help safety-net providers help vulnerable patients have access to affordable medicines. Today, it has become a multi-billion-dollar hospital markup program that allow large non-profit hospital systems to generate significant profits with little transparency or accountability for how those profits are spent.
The playbook: The business model is straightforward: participating hospitals and clinics can purchase medicines at steep discounts, mark them up by thousands of dollars and keep the difference. That growth has transformed 340B from a targeted safety-net program into the second-largest federal drug program, while leaving few requirements for how hospitals use the revenue they generate.
And there is no requirement that patients receive the savings.
Hospitals win, patients lose: The lack of accountability has real consequences. Today drug spending per commercial patient is on average 200% higher at 340B hospitals than at non-340B hospitals, and many of those hospitals continue to aggressively pursue patients for unpaid medical bills. So who is actually benefiting?
Patients, employers and taxpayers deserve to know where the money is going, and why a program created to help vulnerable patients can leave them facing higher costs.
The final score: Weak oversight has allowed large hospital systems to turn what was once a safety-net program into a lucrative revenue stream, with limited accountability for how those dollars are spent. It is time for federal reform to strengthen transparency and oversight and require that 340B benefits low-income and uninsured patients with access to lower cost medicines.
Learn more at PhRMA.org/340B.
Molly Jenkins
Molly Jenkins is a senior director of Public Affairs at PhRMA, where she leads communications on the 340B hospital markup program. Before joining PhRMA, she led issue advocacy and reputation campaigns at Purple Strategies. She also worked on Capitol Hill in serval different capacities, including leading communications for Rep. Greg Walden and as press secretary for the Energy and Commerce Committee. Molly has an M.A. in Health Communication and Media Relations from Johns Hopkins University and a B.A. in journalism from Texas Christian University.
Molly Jenkins