05 Jan Congress Must Amend the 340B Program to Bring Justice to Communities of Color
Hospital executives across the country are exploiting a multi-billion-dollar federal program that was created to help vulnerable American patients—especially those in communities of color. It’s crucial that Congress reform the program so that it delivers real relief to underserved patients, instead of padding hospitals’ bottom lines.
Three decades ago, in 1992, Congress introduced the 340B Drug Pricing Program, which gives qualifying hospitals and clinics serving low-income and uninsured communities the opportunity to purchase drugs at a decreased cost—anywhere between a 20% – 50% discount.
Lawmakers expected hospitals would use the savings to provide more charity care to disadvantaged patients. Instead, many are purchasing vast quantities of discounted medicines and reselling them at a big markup to fully insured, affluent patients. Since the law does not explicitly require hospitals to reinvest their savings into underserved community, they are simply deciding to pocket the difference.
These practices are troubling because they actually undermine low-income patients’ ability to receive quality care. A study in the New England Journal of Medicine found, “financial gains for hospitals from the 340B Program have not been associated with clear evidence of expanded care or lower mortality among low-income patients.”
What is even more concerning is hospitals are also exploiting a loophole that allows them to contract out their 340B pharmacy services to an unlimited number of retail pharmacies. This means private companies including CVS, Walgreens, and Walmart are eligible to profit from selling government subsidized drugs. Because of this loophole, the number of facilities that have signed up for the 340B program has increased by 517% between 2000 and 2020. Total purchases through the program have soared from about $4 billion in 2007 to $38 billion in 2020.
As Richmond Mayor Levar Stoney noted, in a call for Congress to fix the problem, “it is immoral to profit off the backs of Black and Brown residents under the guise of ‘healthcare’ and it must cease immediately.”
He’s right. It’s time for lawmakers to reform the 340B program, so that the discounts actually flow to the vulnerable patients that Congress intended to help.