340B profit exceeds charity care spending for 85% of disproportionate share hospitals: Report

A recent report from the Alliance for Integrity and Reform of 340B found that 85% of disproportionate share hospitals in the U.S. received more from 340B profit than they invested in charity care in 2022. 

The report's 340B data comes from the Health Resources and Services Administration regarding total sales to disproportionate share hospitals at the 340B price. DSH charity care costs were pulled from the most recent Medicare cost report from each hospital. For the hospitals that did not report charity care, their most recent prior annual report that features charity care was reported. 

Through the 340B program, pharmaceutical manufacturers taking part in Medicaid must provide discounted pricing for certain outpatient drugs to covered healthcare organizations that provide care to uninsured and low-income populations. 

Around two-thirds of U.S. hospitals receive medicine discounts under 340B. 

Here are four things to know from the report:

1. Disproportionate share hospitals received around $44.1 billion in 340B gain in 2022 but reported $18.5 billion in charity care costs. 

2. In 18 states and the District of Columbia, all disproportionate share hospitals earned more in 340B than they spent on charity care.

3. Across 47 states and the District of Columbia, over half of disproportionate share hospitals earned more in 340B than they spent on charity care. 

4. "The fact that charity care costs account for only 42 percent of DSH hospitals’ 340B profit, on average, implies that DSH hospitals primarily use 340B profit for other purposes, including funding payroll, equipment, and other operating costs," the report said.

A spokesperson for the American Hospital Association said in a statement shared with Becker's March 28 that the report  is "another in a long line of PhRMA-funded anti-340B work that attempts to obfuscate the truth by only focusing on one component of community benefit – the provision of charity care." 

The report excludes the other ways that 340B hospitals rely on their savings to expand, improve and maintain care access for patients and communities. In 2020, 340B hospitals invested $84.4 billion into community benefits including research and education, the spokesperson said. 

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