The 340B drug discount program: hospitals generate profits by expanding to reach more affluent communities

Health Aff (Millwood). 2014 Oct;33(10):1786-92. doi: 10.1377/hlthaff.2014.0540.


The federal 340B program gives participating hospitals and other medical providers deep discounts on outpatient drugs. Named for a section of the Veterans Health Care Act of 1992, the program's original intent was to help low-income and uninsured patients. But the program has come under scrutiny by critics who contend that some hospitals exploit the drug discounts to generate profits instead of either investing in programs for the poor or passing the discounts along to patients and insurers. We examined whether the program is expanding in ways that could maximize hospitals' ability to generate profits from the 340B drug discounts. We matched data for 960 hospitals and 3,964 affiliated clinics registered with the 340B program in 2012 with the socioeconomic characteristics of their communities from the US Census Bureau's American Community Survey. We found that hospital-affiliated clinics that registered for the 340B program in 2004 or later served communities that were wealthier and had higher rates of health insurance compared to communities served by hospitals and clinics that registered for the program before 2004. Our findings support the criticism that the 340B program is being converted from one that serves vulnerable patient populations to one that enriches hospitals and their affiliated clinics.

Keywords: Hospitals; Medicare; Pharmaceuticals.

Publication types

  • Observational Study
  • Research Support, N.I.H., Extramural

MeSH terms

  • Drug Costs / legislation & jurisprudence*
  • Humans
  • Medically Uninsured
  • Medicare / economics
  • Medicare / legislation & jurisprudence
  • Prescription Drugs / economics*
  • Prescription Drugs / therapeutic use
  • Residence Characteristics / statistics & numerical data
  • Safety-net Providers / economics
  • Safety-net Providers / legislation & jurisprudence*
  • Socioeconomic Factors
  • United States


  • Prescription Drugs