At No Cost to Federal Government a Lifeline for America's Communities

As the U.S. healthcare system wrestles with rising costs and deepening disparities, one federal program quietly continues to serve as a financial and clinical lifeline for millions of Americans: the 340B Drug Pricing Program. Since its inception in 1992, 340B has enabled safety net hospitals, community health centers, and other providers to purchase outpatient medications at reduced prices. These savings aren't about boosting bottom lines—they're about keeping doors open, expanding access to care, and delivering essential services for all.

At its heart, 340B is about getting medicine—and the healthcare services needed to ensure their safe and effective use—to people who otherwise might go without it. It empowers hospitals that serve high numbers of uninsured and modest-income patients, as well as Federally Qualified Health Centers (FQHCs) and Ryan White clinics that reach the working poor. The savings realized under 340B are not pocketed. These providers invest funds directly into programs that offer mental health services, treat substance use disorders, fund mobile clinics, and support chronic disease management. In many cases, access to the 340B program is the determining factor in whether a provider can afford to keep its pharmacy open to serve those who would otherwise go without treatment.

The 340B program is a small program with big benefits. The discounts provided account for only 3% of drug companies' global revenues. At the same time, drug price increases continue to rise faster than inflation. In the United States, where drug companies already benefit from federally supported insurance programs and drug prices that are over three times higher than the rest of OECD countries, the 340B program is a reasonable accommodation to meet their obligations to be good corporate citizens. While the impact of the 340B program on drug companies is minimal, the impact on health is significant.

Take community health centers, for example. These organizations are often the only providers in rural towns or urban neighborhoods. With the help of 340B, they can offer sliding scale fees, reach out to patients who are unhoused or living in poverty, and provide preventive care and health screenings that are crucial in addressing rising healthcare costs. For diseases like diabetes, 340B drug pricing ensures access to both medications as well as the patient education and healthcare provider services needed to effectively manage a complex chronic condition. In short, they make health more than a buzzword—they make it real.

Hospitals also depend on 340B to sustain emergency rooms, neonatal intensive care units, and oncology programs. Small rural hospitals in particular often rely on these savings to remain operational. When one of these facilities shuts down, the consequences are immediate and severe: longer travel times for urgent care, delayed treatments, and a deeper strain on already stressed healthcare systems.

Despite its impact, 340B has come under fire from some in the pharmaceutical industry and others who argue the program is being misused or lacks sufficient oversight. While oversight improvements are a worthy discussion, such criticisms ignore the real-world pressures providers face: skyrocketing drug prices, declining reimbursements, and the increasing demand for services as the population ages and grows more medically complex. Along with reasonable reforms that support program integrity, it's time to make common sense changes to reduce the regulatory burden on providers and let them focus on their main job—delivering high-quality health care to all.

In the current budgetary environment, maintaining the 340B program is more important than ever. The program doesn't add to the federal budget. Instead, it gives healthcare providers the means to stretch existing resources further—just as Congress intended. Reducing or eliminating the 340B program to increase the profit of global pharmaceutical companies would shift costs to patients while simultaneously putting additional strains on state and federal budgets at the worst possible time.

Undermining the 340B program would not just threaten individual institutions—it would unravel an already fragile health infrastructure. The people most affected would be those with the fewest options: modest and low-wage workers, rural residents, and those without insurance.

The 340B program is a critical bridge between affordability and access, between policy and people. While reforms of the program may be useful, it is imperative they be guided with an overarching goal of improving how the program works for patients, not of providing a windfall for pharmaceutical manufacturers, who have experienced record profits since the program's inception. Weakening the 340B program would be short-sighted and harmful. Strengthening it is a fiscal imperative—for hospitals, clinics, and all communities.

Author:

Jane L. Delgado, Ph.D., M.S., is a highly esteemed and in-demand analyst and thought leader. She is the President and CEO of an NGO, Healthy Americas Foundation (HAF). She sits on the boards of the U.S. Soccer Foundation (Chair, Audit), McLean Hospital (Belmont, MA), the National Biodefense Science Advisory Board, the Lovelace Biomedical Research Institute (Investment Committee), and Argonne National Labs (Chair, Compensation).