30 Years of 340B: Policymakers Must Act Now to Prioritize Transparency, Accountability, and Oversight

With the 340B program marking its 30th anniversary in November, we must ask: who is benefiting from this drug pricing program? Is it truly supporting low-income communities as it was intended to?

A recent article from the New York Times shows how program flaws and a lack of serious oversight have allowed some bad actors to take advantage of 340B drug discounts to increase profit margins at the expense of patient care.

The article analyzes the case of Richmond Community Hospital — a hospital in Virginia that has recently set record profits in the state. Despite generating massive margins for owner Bon Secours Mercy Health, Richmond Community is severely struggling. It was forced to close its I.C.U. in 2017 and is lacking key specialists including cardiologists and gastrointestinal doctors. The article demonstrates a clear disconnect: community-based hospitals like Richmond Community Hospital are enrolled in the 340B program because they are expected to treat a large number of indigent patients, but the profits they generate from the program are being diverted to wealthier communities by the larger hospital system that owns them. This does not benefit the vulnerable community Richmond Community Hospital is trying to serve.

Recent data from the Health Resources and Services Administration demonstrates the 340B program continues to grow exponentially. In fact, discounted purchases made under the 340B program reached a record $43.9 billion in 2021 — with hospitals accounting for 87% of these purchases. Despite acquiring these medicines at a deeply discounted price, hospitals can — and do — mark up prices at a high rate for patients and insurers, securing untold profits. Due to a lack of program transparency, hospitals are not required to report how they are using these profits to support low-income patients’ access to medicines.

A recent study from the Community Oncology Alliance shows that 340B hospitals maintain high prices for top oncology medicines, pricing them at 4.9 times their 340B acquisition rate, keeping the difference between the marked up price and 340B purchase price. Additionally, a report from Milliman adds to evidence that 340B hospitals have higher per patient outpatient pharmacy costs than their non-340B counterparts, and drive higher spending through prescription of more expensive medications for patients.

It’s time for key policymakers to take note of the growing evidence that transparency, accountability, and oversight must be prioritized within the 340B program. By 2026, 340B will be the largest federal drug program. Along with this massive growth, reflection on how the program is benefiting vulnerable communities is not only warranted, but critically needed.