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About 340B

Congress created the 340B program in 1992 to help certain healthcare “safety-net providers” that serve many uninsured or vulnerable patients reduce outpatient prescription drug costs. The 340B program requires prescription drug manufacturers to provide discounts to specified federally-funded clinics and certain hospitals, otherwise known as “covered entities,” as a condition of participation in the Medicaid program. Certain 340B covered entities, like disproportionate share hospitals (DSH), are under no obligation to pass these discounts to patients or reinvest profits from 340B into free or reduced costs care for low-income patients.

Since its inception, the program has grown exponentially, yet patients have not always seen the benefits of that growth. In fact, 340B has more than quadrupled in size, from $9 billion in 2014 to $38 billion in 2020, and there is no evidence that this growth has been matched with patient benefit. Vulnerable and uninsured patients should be able to rely on hospitals and clinics participating in 340B to help provide affordable access to lifesaving medicines. But evidence shows this is often not the case. Instead: 

Growth of 340B has continued in recent years despite declines in the number of uninsured patients. The major drivers of this growth are threefold: 

At the same time, the 340B program is uniquely positioned to help advance health equity, a priority for policymakers today. But unfortunately, lax oversight and transparency requirements have resulted in abuse of the program by 340B participants and the pharmacies they contract with to dispense 340B medicines. A recent report found only 38% of 340B DSH hospitals, and less than one third of DSH-affiliated child sites and contract pharmacies, are located in medically underserved areas. 

A number of changes are needed to increase oversight and accountability in the 340B program, which will help ensure it is working in the best interest of patients: