New analysis adds to research questioning whether 340B is working as Congress intended

Nicole Longo
Nicole Longo October 13, 2021

New analysis adds to research questioning whether 340B is working as Congress intended.

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As the 340B program has grown over the past decade, there has been increased interest in it and ensuring it works in the best interest of patients. Unfortunately, study after study finds that often isn’t the case. In fact, perverse incentives and a lack of hospital accountability seem to undermine 340B. A new study published in the peer-reviewed American Journal of Managed Care is just the latest to sound alarm bells on the 340B program.

The study, funded by HHS’ Agency for Healthcare Research and Quality, concluded that “Participation in the 340B Drug Pricing Program has not been associated with increases in hospital-reported uncompensated care provision.” Meaning 340B hospitals, hospitals that are raking in billions of dollars each year through the program, are not using that money to provide increased care to low-income and uninsured patients – which is the whole point of the 340B program.

The study also comes to several other conclusions based on this finding:

  • “Our conclusions are consistent with prior work finding that the 340B program has not been associated with net increases in community benefit spending or outcomes for low-income populations.”
  • “Evidence to date on the program suggests that policies to finance safety-net care should more transparently and directly target resources to patient populations of interest, rather than indirectly by altering the profitability of some services, and include greater oversight and enforcement over how providers receiving resources use them.”
  • “Relying on hospitals to invest surplus in care for the underserved without incentives to do so or strong oversight is not a consistently effective strategy.”

Sadly, the findings of this new study are not all that surprising. Earlier this year, a 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.” Similarly, an article published in Health Affairs found many government and nonprofit hospitals’ charity care provision was not aligned with their charity care obligations arising from their favorable tax treatment. 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. And the Alliance for Integrity and Reform of 340B has consistently found that roughly two-thirds of 340B hospitals provide less charity care than the national average for all hospitals.

How many studies must be published showing hospitals are taking advantage of 340B without using the funds to help patients before policymakers will take action? 340B covered entities must be held more accountable within the program. That is the only way to ensure they are using the tens of billions of dollars in discounts manufacturers provide with the intention to help needy patients. One simple step that Congress should take is to add hospital charity care requirements to the existing 340B eligibility criteria, as well as reporting requirements so that there is transparency into how the 340B dollars are spent. Hospitals should be required to meet a certain threshold of charity care and report information on how 340B dollars are spent to HRSA for improved oversight.

Learn more at PhRMA.org/340B.

Topics: 340B