Dive Brief:
- A new report from a conservative think tank is accusing 340B hospitals of providing less charity care than other nonprofit hospitals, despite receiving discounted drugs.
- Hospitals participating in the 340B drug discount program spent 2.16% of their operating expenses on free or discounted care for low-income patients, called charity care, compared with 2.82% at non-340B hospitals, according to a Thursday analysis from the Pioneer Institute and CancerCare.
- Hospitals pushed back on the report, with the American Hospital Association saying 340B hospitals provide support for patients in other ways. “This report is another in a long line of misleading studies that wrongly singles out charity care as the only way to measure how hospitals provide for their patients and communities,” Bharath Krishnamurthy, director of pharmaceutical policy at the AHA, said in an email.
Dive Insight:
Created by Congress in 1992, the 340B program allows safety-net providers that care for a large number of low-income and uninsured patients to purchase a slew of outpatient drugs at a discount from drugmakers. The discounts can be steep, between 25% and 50% on drug purchases, and providers retain the savings.
Although 340B hospitals are not legally required to invest the savings into charity care, the program has come under fire from critics who say hospitals use the savings to pad profits.
Those criticisms have intensified in recent years as spending in the program balloons and lawmakers on both sides of the aisle increasingly scrutinize 340B. Hospitals and outpatient facilities purchased $100 billion worth of 340B drugs last year, a nearly 23% increase from the year prior.
The latest research from the Pioneer Institute and CancerCare, a nonprofit that provides free support and services to cancer patients, joins a growing list of studies scrutinizing how 340B hospitals spend money.
There’s an implicit expectation that 340B hospitals will use the money saved on drugs to help vulnerable patients, the report says.
But 340B hospitals are providing less charity care than their non-340B counterparts.
In addition to spending less on charity care overall, Pioneer said 340B hospitals spend less on charity care for uninsured patients: Spending represented 1.6% of operating expenses at 340B hospitals, versus 2.26% at non-340B hospitals, according to the report.
“The 340B program is intended to strengthen the healthcare safety net,” the report stated. “A program with that purpose should demonstrate, in measurable terms, that its financial benefits align with vulnerable patients’ needs.”
The report, which compared thousands of hospitals using cost data from the CMS from the first quarter of 2025, called for greater transparency, auditable reporting of 340B revenue and a requirement that 340B hospitals provide more charity care than non-340B hospitals.
Hospitals say analyzing charity care doesn’t paint the full picture of how 340B savings are used. By the AHA’s own metrics, 340B hospitals have provided nearly $100 billion in total community benefits.
“These direct patient benefits include charity care, but 340B hospitals also use their savings to support access to behavioral health clinics, diabetes counseling, healthy food banks, and access to free or discounted drugs, to name a few examples,” Krishnamurthy said.
Still, both lawmakers and the Trump administration have expressed interest in reforming 340B.
The HHS has attempted to institute rebates instead of upfront discounts in the program, though past efforts have fizzled out in court. It’s also proposed to slash Medicare payment rates for the program next year.
On the Hill, several legislative proposals have been introduced targeting 340B this year, including a Senate discussion draft released in June that would let drug manufacturers elect to replace upfront discounts with rebate models and enforce stricter patient eligibility requirements.
Also this summer, lawmakers introduced a bipartisan Senate bill and a House bill, which both advocate for reform to the program.
