340B Hospitals Report New Data on How They Use Savings to Help Patients with Low Incomes and Rural Communities

Hospitals participating in the 340B drug pricing program report new data on how they use their savings from prescription drug price discounts to maintain or expand patient care, to support uncompensated care for patients living with low incomes, and in the case of rural hospitals, to keep their doors open in an era of frequent closures.

A survey of nearly 500 hospitals participating in 340B found that their annual program savings vary based on hospital size. For small, rural hospitals, median savings were $564,000, while disproportionate share (DSH) hospitals had median savings of $8.9 million. The largest savings were reported by a relatively small number of children’s hospitals, with a median of $12.6 million.

Hospitals that qualify for 340B status can obtain discounts on many outpatient prescription drugs to treat their patients with cancer, heart disease, diabetes, and other conditions. These hospitals use those savings to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services. The program, created in 1992, uses no tax dollars to support the care being provided. Savings come from discounts provided by pharmaceutical manufacturers.

“Congress created 340B for a specific reason, to make sure safety-net hospitals, health centers, and clinics are there to care for patients who cannot afford their care,” said Maureen Testoni, president and CEO of 340B Health, which conducted the survey. “340B hospitals are on the front lines of caring for people in need, whether in the face of global pandemic or chronic disease, so that patients can live fuller lives.”

Hospitals also report that they use 340B savings to dispense free or low-cost drugs, combat the opioid epidemic, and improve health outcomes for their patients, including though improved medication adherence, increased access to care, and reduced readmissions.

340B is particularly critical to rural hospitals. According to the U.S. Census Bureau, one in five Americans live in rural areas, many of which are sparsely populated and far from urban centers. Over the past decade, more than 120 rural hospitals have closed. Nearly three-quarters of small critical access hospitals (CAHs) report that 340B savings are a key element to maintaining their operations. More than a third of CAHs reported using their 340B benefits to support telemedicine programs. More than half (57%) of rural hospital respondents reported that a loss of 340B savings could force them to close.

More broadly, hospitals reported that a loss of some or all of their 340B savings would force them to reduce their provision of uncompensated care, including the free or low-cost drugs they offer to patients who can’t otherwise afford them. Hospitals also indicated that they likely would have to cut back certain clinical areas, including treatment for cancer, diabetes, mental health and substance abuse, and HIV/AIDS, if their 340B savings were scaled back.

“This report provides more clear evidence of the critical role 340B savings play in providing care for patients in need. Hospitals are fulfilling the mission set out by the enactment of the 340B statute in documented ways that contribute to the continuing, broad, bipartisan support for the program,” Testoni said.

Read the report and see our infographic summarizing the key findings.