Mixed results on how hospitals use 340B funds: 5 things to know

New research of over 300 documents reveals a mixed bag of evidence surrounding the controversial 340B Drug Pricing Program's impact on the U.S. healthcare system, a study published Nov. 22 in JAMA Health Forum found.

Created in 1992, the 340B Drug Pricing Program requires Medicaid-participating drug manufacturers to provide hospitals with discounted outpatient drugs from around 20% to 50%, allowing for better care of low-income and underserved populations.

Five things to know from the study:

1. Researchers found conflicts in how the revenue focuses on intended charity care and low-income populations. One study found that disproportionate share hospitals participating in 340B saw increases in charity care spending (29%), discounted care (4%), and income eligibility limit for discounted care (19%), but no association with offering low-profit medical service. However, one study found no evidence that uncompensated care increased after hospitals joined the 340B program.

2. Although low-income and underserved populations are the target for 340B, researchers found evidence suggesting some of the contracted pharmacies dispensing discounted drugs were stationed in higher-income, less diverse neighborhoods.

3. While some patients saw free or low-cost medications from covered hospitals or contract pharmacies, others saw increased out-of-pocket costs at 340B covered entities when paying in cash.

4. Noncompliance rates of covered entities continue to face scrutiny, with Health Resources and Services Administration audits from 2012 to 2016 revealing 63% to 82% noncompliance rates (one or more violations of the program), with similar findings in a 2012 to 2020 study.

5. Hospitals can financially benefit from the 340B program. In 2016, the mean estimated 340B profits from Medicare Part B for hospitals were $2.5 million, with median profits at $800,000, equaling 0.3% of hospital operating budgets or 9.4% of uncompensated costs.

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