The Case for Improvements to the 340B Drug Pricing Program

Hospitals are the most significant section of health care spending in the country, accounting for over 30% of national health care spending; despite this large share of expenditures, historically, there has been and continues to be a lack of transparency in U.S. hospital spending.

The 340B Drug Pricing Program maximizes federal resources for the benefit of patients and community services by requiring prescription manufacturers to provide discounts to eligible hospitals. The program reimburses the hospital, so patients are unaware if they are receiving the maximum benefits of the program. It also means 340B hospitals will benefit even when they are predominantly serving commercially insured patients. Many taxpayers would like to see accountability measures in place to protect the program for the vulnerable community. 

There is no requirement for 340B hospitals to pass down their discounts to the patients. Rationally, it makes sense for the 340B program discounts to assist in lowering patients’ insurance costs, out-of-pocket (OOP) costs, and drug pricing, yet the government does not monitor these outcomes.

A recent Community Oncology Alliance report details that 340B hospitals charge insurers over three times the cost of the drugs they acquire. These costs are subsequently passed on to seniors and their families, paying high prices for prescriptions. For example, Epogen, a medicine for patients with anemia, was 11 times higher than the 340B discount price.

340B hospitals profit from commercially insured patients more than patients insured through Medicare. Seniors and their health are potentially at risk for incentives to treat the healthier, younger, and commercially insured demographic as a priority for profit. 

Data continues to reveal concerns within the 340B program: 340B hospitals charge uninsured patients up to three times more than they pay for drugs. In some instances, uninsured patients pay up to 15 times more than their insured counterparts. This aggressive drug pricing totally contradicts the proposed objective of these “non-profit” institutions.

The 340B Program is vital for patients in need, and senior patients deserve better from goals meant to bring better access to health care services and medicines, not more profits to hospitals.

Transparency is a critical tool in driving down overpriced goods and services in the U.S. health care system, such as increasing accountability to the 340B Drug Pricing Program. Due to a lack of transparency and dramatic price asymmetry among different hospitals, senior patients, today cannot even compare the cost of their medicines, such as cancer drugs, across local hospitals. Making drug prices transparent will put pressure on hospitals to control their prescription prices.

We urge our Congressional leaders, including Florida Congresswoman Stephanie Murphy and Louisiana Senator Bill Cassidy, to implement further policy changes and accountability to the 340B Drug Pricing Program to ensure vulnerable communities access the safety-net program as designed. 


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