Charlene MacDonald, executive vice president of the Federation of American Hospitals, pushed back against implications made during an Oct. 23 Senate hearing on the federal 340B drug pricing program.
Ms. MacDonald released a statement Oct. 24 following the Senate Health, Education, Labor and Pensions Committee’s hearing, which included testimony from Michelle Rosenberg, director of healthcare at the Government Accountability Office. Ms. Rosenberg suggested the Health Resources and Services Administration lacks proper oversight and data to confirm participating hospitals are qualified nonprofits.
“Over the years, the program has grown and become more complex. Federal oversight needs to catch up with this growth and related changes in order to ensure that the program is operating as Congress intended,” Ms. Rosenberg told senators during the hearing.
Ms. MacDonald, however, emphasized that taxpaying hospitals — which represent more than 1,000 facilities across the U.S. — do not benefit from the 340B program.
“Despite our long-standing commitment to serving vulnerable and low-income Americans, taxpaying hospitals are not eligible for, nor do we participate in, the 340B program,” Ms. MacDonald said. “Put plainly: our hospitals derive no benefit from the 340B drug discounts available to other hospitals.”
She noted that investor-owned facilities often provide higher average levels of charity care compared to their nonprofit counterparts, while also contributing to state and local tax bases.
“Even with this uneven playing field, taxpaying hospitals provide more charity care on average than other hospitals — all while paying state and local taxes to feed directly into the communities we serve,” she said. “We encourage policymakers to ensure the 340B program serves the patients it was intended to help while understanding this is not a policy that helps the over 1,000 taxpaying hospitals across American provide 24/7 patient care.”
The FAH’s statement underscores a longstanding tension over how the 340B program is administered and who should qualify for its drug discounts.
While the FAH voiced concerns about program fairness, the American Hospital Association defended the 340B program as an essential tool for nonprofit hospitals to offset rising drug costs and fund essential services for low-income communities.
In a statement submitted to the committee, the AHA said the 340B program enables hospitals that care for a disproportionate share of uninsured and Medicaid patients to stretch limited resources and reinvest savings to improve access to care — without using taxpayer dollars.
Participating hospitals use 340B savings to provide free or discounted medications, fund specialty services such as oncology or diabetes education, and launch community outreach programs. In rural areas, where nearly half of hospitals operate at a loss, 340B savings often serve as a financial lifeline to keep doors open.
In 2022, hospitals participating in 340B provided nearly $100 billion in community benefits — more than double the $46.5 billion in estimated 340B drug sales that year, according to AHA data. These benefits included financial assistance, unreimbursed Medicaid costs and transportation support.
The AHA also noted that while critics argue the program has grown beyond its original scope, that growth largely stems from congressional decisions to expand eligibility — particularly in 2010 to include critical access hospitals and rural facilities.
Opponents, the AHA said, have cited unfounded claims that the program drives physician practice acquisitions or encourages spending increases. The organization cited data showing that insurers and corporate entities have had a greater role than hospitals in reshaping the physician landscape.
“Ultimately, these unsupported allegations about the growth and impact of the 340B program have become the basis for repeated attempts to scale back the program at the expense of Americans nationwide,” the AHA said.
“Ultimately, these unsupported allegations about the growth and impact of the 340B program have become the basis for repeated attempts to scale back the program at the expense of Americans nationwide,” The AHA said in an Oct. 23 statement provided to Becker’s. “These misimpressions in the public narrative have undergirded efforts to fundamentally change how 340B hospitals access 340B discounted pricing from an upfront discount to a back-end rebate and impose arbitrary restrictions on accessing 340B pricing through partnerships between 340B hospitals and community pharmacies. If allowed, these changes to the program would delay access to medications, increase administrative costs and undermine the financial stability of the hospitals that the program is meant to assist.”
The AHA urged Congress to preserve the program’s flexibility, arguing that its ability to let each hospital determine how best to use its savings is key to its continued success.
