A report from a conservative think tank asserts that hospitals in the 340B drug discount program allocate less funds to charity care compared to other nonprofit hospitals. The study, released by the Pioneer Institute and CancerCare, revealed that 340B-participating hospitals devoted 2.16% of their operating expenses to free or discounted care for low-income patients, whereas non-340B hospitals invested 2.82%.
The 340B program, created by Congress in 1992, allows safety-net providers to purchase outpatient drugs at a discount from drugmakers, with savings ranging from 25% to 50%. Although hospitals are not required to invest these savings into charity care, critics argue that they should use the funds to support vulnerable patients.
Charity Care Spending
According to the report, 340B hospitals spent less on charity care overall, as well as for uninsured patients specifically. The report found that spending on charity care for uninsured patients represented 1.6% of operating expenses at 340B hospitals, versus 2.26% at non-340B hospitals.
The Pioneer Institute and CancerCare analyzed cost data from the Centers for Medicare and Medicaid Services (CMS) from the first quarter of 2025, comparing thousands of hospitals. They called for greater transparency, auditable reporting of 340B revenue, and a requirement that 340B hospitals provide more charity care than non-340B hospitals.
Response from Hospitals
Hospitals have pushed back against the report, with the American Hospital Association (AHA) arguing that analyzing charity care does not provide a complete picture of how 340B savings are used. Bharath Krishnamurthy, the AHA’s director of pharmaceutical policy, stated that 340B hospitals provide support for patients in other ways, such as access to behavioral health clinics and healthy food banks.
According to the AHA, 340B hospitals have provided nearly $100 billion in total community benefits, including charity care, access to free or discounted drugs, and other support services. Critics argue that the program has come under fire for allowing hospitals to use savings to pad profits, rather than supporting vulnerable patients.
In recent years, spending in the 340B program has increased significantly, with hospitals and outpatient facilities purchasing $100 billion worth of 340B drugs last year, a nearly 23% increase from the previous year. This has led to intensified scrutiny from lawmakers and the Trump administration, with several legislative proposals introduced targeting 340B reform.
Reform Efforts
The Department of Health and Human Services (HHS) has attempted to institute rebates instead of upfront discounts in the program, although past efforts have been unsuccessful in court. The HHS has also proposed slashing Medicare payment rates for the program next year. Lawmakers have introduced bipartisan Senate and House bills advocating for reform to the program, including stricter patient eligibility requirements and rebate models.