Congress created the 340B Drug Pricing Program in 1992 under the Public Health Service Act to support safety-net hospitals and other providers that serve low-income, vulnerable patients. At no cost to taxpayers, the program allows these “covered entities” to purchase outpatient drugs at a discount from drug manufacturers to help stretch scarce resources to reach more eligible patients and provide more comprehensive services.
Only hospitals that treat a significant share of vulnerable patients can qualify for 340B. These safety-net hospitals utilize the savings under the 340B program to provide access to programs and services for their communities, including low-income, rural, and other underserved patients. Some examples include providing free or discounted prescriptions to uninsured or low-income patients, improving access to specialized care previously unavailable in underserved areas, establishing and improving neighborhood clinics, and creating multidisciplinary clinics to treat substance use and mental health disorders.
According to the Pew Charitable Trusts, 340B discounts are only 1.4% of gross U.S. drug sales and the impact of 340B on manufacturers’ revenue is under 2%. Yet, the discounts generated from the program allow safety-net hospitals to provide crucial services to their patients.
Restricting the scope of the program would not result in additional funds for the federal government and could potentially leave patients who rely on these essential programs without necessary services.