Abuse of 340B Program Impacts Patient Care


Inadequate oversight has distorted the noble intent of the 340B Drug Pricing Program, transforming it into a perverse profit generator for many of America’s tax-exempt hospitals.

As oncology nurses, you are at the front lines of patient care in your communities— administering medications, answering questions, and providing your patients with the best guidance on treatment. This is a fact that I am reminded of on a regular basis as the proud husband of an oncology nurse. Having access to caring providers is crucial to treating this devastating disease and improving the quality of life of patients with cancer.

But oncology nurses also all too often see patients who must choose to sacrifice their own health and wellbeing every day to save money. For many low-income patients, visiting a doctor and taking medication to complete necessary cancer treatment is often weighed against other competing, higher-priority needs, like feeding the family or paying rent.

This is one of the reasons why the 340B Drug Pricing Program was established by a bipartisan act of Congress in 1992. This little-known federal program was created to help uninsured or vulnerable patients get access valuable medications regardless of their abilities to pay. This was done by providing certain participating hospitals or safety net clinics with discounted medicines. The 340B program has become an extremely important program for patients in need in this era of unaffordable and unsustainable drug prices.

Unfortunately, inadequate oversight has distorted the noble intent of 340B, transforming it into a perverse profit generator for many of America’s tax-exempt hospitals, few of which provide any meaningful level of charity care.

Though some 340B hospitals provide substantial charity care, the data show that the vast majority do not. One report found that only 24% of 340B hospitals provide 80% of all the charity care, despite representing less than half the beds available in the program.1 The same report also noted that 37% of 340B hospitals provided charity care representing less than 1% of total patient costs.

Many 340B hospitals are receiving drug discounts for all their patients (insured, underinsured, uninsured) even though care for the underserved is a tiny fraction of their total costs. In fact, a report by the Office of Inspector General (OIG) found that two-thirds of hospitals do not offer the reduced 340B prices to uninsured patients—the very patients 340B was designed to help.2 Another investigation by the Government Accountability Office (GAO) found that many 340B hospitals require patients to pay full price for their prescriptions.3

Hospitals have become adept at taking advantage of 340B because it allows them to acquire drugs at discounts ranging as high as 60%—discounts that they do not pass on to patients.4 To take advantage of these deep discounts, many hospitals have embraced 340B as an open-ended arbitrage (think: buy drugs at a low price; sell them at a high price) allowing the hospitals a substantial profit from the drugs they deliver to patients. This means that while hospitals’ bottom lines have grown larger under 340B, the benefits of the program are often not actually reaching patients.

For too many hospitals, the 340B program has become a road to profits, not a safety net and not a way to expand charity care for uninsured, indigent patients. For too many patients, particularly those with cancer, the 340B program has not reduced their cost of care 1 cent.

It is time to fix the 340B program to make sure it actually helps patients in need, not the large hospital corporations that abuse it. Given the nature of your work, nurses can play a constructive role in improving this important program. We need to remind hospitals of the original intent of the 340B program: helping to ensure that vulnerable or uninsured patients can afford the cancer care that they need.

Ted Okon is executive director of the Community Oncology Alliance, a nonprofit organization dedicated to preserving and protecting access to community cancer care, where the majority of Americans with cancer are treated. Learn more and get involved in COA at www.CommunityOncology.org.


  • AIR 340B. 340B facilities and charity care. 340breform.org/wp-content/uploads/2017/10/AIR340B-Designed_340B_CharityCare_FINAL.pdf. Published October 2017. Accessed July 17, 2018.
  • Office of the Inspector General, Department of Health & Human Services. Contract pharmacy Arrangements in the 340B Program. oig.hhs.gov/oei/reports/oei-05-13-00431.pdf Published February 4, 2014. Accessed July 17, 2018.
  • U.S. Government Accountability Office. Action needed to reduce financial incentives to prescribe 340B drugs at participating hospitals.” www.gao.gov/assets/680/670676.pdf. June 5, 2015. Accessed July 17, 2018.
  • Berkeley Research Group. “The oncology drug marketplace: trends in discounting and site of care.” www.communityoncology.org/wp-content/uploads/2017/12/BRG_COA-340B-Study_NOT_EMBARGOED.pdf. Published December 2017. Accessed July 17, 2018.

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