Fixing 340B is a Good Start Toward Addressing Socioeconomic Inequities

By Penn Quarter Partners

The socioeconomic aspects of illness and mortality in this country have been well documented.  Americans with low incomes and limited resources are more likely to be afflicted with illness and have shorter lives. As the U.S. Department of Health and Human Services put it in its Healthy People 2030 initiative, “Across the lifespan, residents of impoverished communities are at increased risk for mental illness, chronic disease, higher mortality, and lower life expectancy.”

This is, of course, a multi-faceted challenge involving both clinical issues and social determinants of health. One problem, however, that can’t be overlooked is the degree to which billions of dollars in healthcare resources are not being adequately allocated and utilized. Policymakers, for example, should be asking regularly why the 340B federal drug discount program is not doing more to help our society’s most vulnerable.

The 340B program has grown at a breathtaking pace in recent years. In 2014, 340B covered entities — hospitals and their contract pharmacies — made $9 billion in discounted prescription drug purchases. In 2025, it crossed the $100 billion mark and it’s still climbing.

That’s a lot of money, but where is it going? An analysis from the HEAL Collaborative is eye-opening. It found that from 2014 to 2022 hospitals participating in 340B saw their financial assets per bed increase by more than 38 percent. Over the same period, the level of care provided at low or no cost to vulnerable and underserved patient populations decreased by almost 14 percent. And large states like California and Texas saw financial assets increase by more than 60 percent while still cutting uncompensated care by double-digits.

Imagine the degree to which the state of America’s health could improve if these tens of billions of dollars annually were being devoted to getting people the medical care and affordable prescription drugs they need instead of boosting hospitals’ bottom lines.

This is not what Congress intended when it created this program in the early 1990s. The mission of 340B was to enable safety-net hospitals to buy prescription drugs from pharmaceutical manufacturers at sharply-reduced prices and then use those savings to make medicines more affordable for low-income and uninsured patients and improve the level of care to underserved communities.

But there is no requirement that hospitals follow through. Consequently, 340B-participating entities have been able to generate enormous profits by selling these discounted drugs to fully-insured patients at a higher price. In the meantime, financially-struggling sick patients aren’t getting the benefits from a program created to help them and they continue to experience the disproportionately poor health outcomes that drives down America’s standing on global health measures.

Penn Quarter Partners is collaborating with stakeholders to raise awareness of this issue and to pursue solutions that would, among other measures, require greater transparency and accountability of participating 340B entities so that the public and policymakers can see how these billions of dollars are being utilized, and help ensure that vulnerable patients are gaining access to the medicines and care they need. 

We have the resources to better address health disparities in this country. Sustainable, purposeful federal reform of 340B is a wise place to start.

For further conversation about this and other health policy topics, contact us at info@pennquarterpartners.com.