The 340B program started under Section 340B of the Public Health Service Act. It helps hospitals that serve people who need extra help with drug costs. Hospitals like disproportionate share hospitals, critical access hospitals, rural referral centers, and children’s hospitals can join. These hospitals often care for many low-income, Medicare, and Medicaid patients who find it hard to get medicines and care.
In 2020, 340B hospitals gave nearly $85 billion in community help. This was 25% more than the year before. This amount included charity care, free or cheaper medicines, and other services for patients. About 68% of all unpaid care in U.S. hospitals came from 340B hospitals, around $43 billion in total. Though the program covers only about 3% of drug manufacturers’ revenues, it helps safety-net hospitals balance out low Medicaid and Medicare payments and pay for community programs.
Hospitals in the 340B program must follow strict rules. They have to confirm their eligibility each year, pass checks done by the Health Resources and Services Administration (HRSA), and keep good records. These rules help stop misuse of discounts and make sure the savings go to patient care.
Hospitals using the 340B program buy outpatient drugs at discounts from 12% up to over 75% off the wholesale price. These savings are very important for many rural and specialty hospitals. They help hospitals stay financially stable, especially in expensive services like cancer treatment, brain disorders, and long-term illness care.
For example, Heart of the Rockies Regional Medical Center (HRRMC), a rural hospital, uses the program to help pay for costly drug treatments. HRRMC puts these savings back into programs like behavioral health, women’s health, and chronic disease care that might get cut without the extra money. The savings also help pay for charity care, outreach in rural areas, care coordination, and sometimes housing for patients who travel far for treatment.
The Johns Hopkins Hospital reported $243 million in savings from 340B in 2023. They used this money to spend $360 million on more than 350 programs in Baltimore. These programs include housing help for homeless people, delivering medicines to patients when they leave the hospital, and special clinics for sickle cell disease and opioid addiction.
The 340B program also helps hospitals that lose money each year. In Massachusetts, 75% of hospitals lost money in early 2024, while drug companies made $347 billion between 2017 and 2022. The 340B program helps these hospitals keep serving vulnerable groups.
Savings from the 340B program do more than just lower drug costs. Hospitals use the money to support services that match community needs, like mental health care, drug use treatment, telehealth, and patient education. These services help patients take their medicines correctly, keep them out of the hospital, and improve fairness in health care.
For example, UMass Memorial Medical Center used almost $20 million from 340B savings in 2022 to help about 39,000 patients. They funded specialty pharmacy, child protection, and medicine management programs. Southcoast Health used 340B money to grow behavioral health, cancer care outreach, and maternal health programs.
340B hospitals care for many Medicaid, Medicare, low-income, disabled, minority, or uninsured patients. Surveys show these hospitals provide about 60% of all unpaid and unreimbursed care in the U.S., even though they are less than 40% of all acute care hospitals. They serve areas with many languages spoken and financial challenges where it is hard to get health care.
Contract pharmacy deals are a key way 340B hospitals help patients get medicines. Many small and rural hospitals do not have their own pharmacies. Partnering with local or specialty pharmacies makes it easier for patients to fill prescriptions, especially in rural areas. Nearly half of Americans live within one mile of a pharmacy, but 42% live more than five miles from a hospital. These partnerships help patients get drugs close to home and keep their care going. More than 80% of rural 340B hospitals rely on contract pharmacies to reach patients.
The 340B program faces many challenges. Some drug companies have fought the program in court. They often refuse to give discounts for drugs filled at contract pharmacies. This caused hospitals to lose over $1 billion in savings between 2020 and 2021. These limits make it harder for hospitals to help vulnerable patients.
Drug companies have also suggested replacing upfront discounts with rebates. Hospitals say this would make operations more complicated and could risk access to cheaper drugs. Rebates might disrupt hospital workflows and cause financial uncertainty.
Some states want to change rules by raising eligibility for hospitals to join the 340B program. This could remove over half of disproportionate share hospitals from the program. Such changes could cut more than $10 billion in unpaid care services.
Some critics say hospitals do not always show clearly how they use 340B savings. But many hospitals, like Johns Hopkins and UMass Memorial, publicly share how they spend the money. The American Hospital Association supports following good stewardship rules to make sure savings help patients and communities.
Many 340B hospitals are now using artificial intelligence (AI) and automation to improve medication management, patient service, and operations. People who run medical practices and IT at these hospitals can use these tools to better spend savings and improve care.
AI systems can watch how patients take their medications. They look at patterns with filling prescriptions and warn if doses or refills are missed. This helps care teams act quickly to help patients, especially those with complicated medicine plans funded by 340B savings.
For example, Johns Hopkins offers home visits from pharmacists with AI help. The AI predicts risks like bad drug interactions or mistakes. These programs lower hospital readmissions and make sure underserved patients get personal care.
Running the 340B program requires hard work to keep track of rules and audits. Automation helps hospital pharmacies track drug stocks, check eligible prescriptions, and keep audit-ready records. This cuts mistakes, saves staff time, and helps follow HRSA rules.
AI can also improve contract pharmacy work by spotting drug use patterns. This helps hospitals keep use levels correct and get the most discounts.
AI tools can also help with patient calls and messages about medicines, refill requests, and appointments at 340B hospitals. Automated phone systems reduce staff work, speed up responses, and keep communication clear and quick.
Connecting automated calls with electronic health records (EHRs) gives patients clear and easy ways to communicate about medicine programs supported by the hospital.
AI data tools help hospital leaders study 340B savings along with patient details, social factors, and health results. This helps hospitals target help where it is most needed and spend money on services that make the biggest difference.
Hospitals can use this data to find neighborhoods with many people having illnesses like diabetes or opioid problems. Then, they can use 340B money to run programs that improve health in these areas.
The 340B Drug Pricing Program is a key federal effort that supports hospitals and clinics caring for vulnerable patients. It gives large discounts on outpatient drugs, helping hospitals stay financially stable while growing health services that fit local needs.
340B hospitals take on much unpaid care and provide special services that many insurers do not fully pay for. Using savings, they support programs like substance use treatment, behavioral health clinics, medicine adherence efforts, telehealth, and social support that help disadvantaged groups.
Hospitals face ongoing challenges from drug company rules and policy threats. Being open, following program rules, and speaking up for the program is important. New technology helps hospitals run the program better and improve patient care. AI and automation help with medicine use, support patients, simplify front office tasks, and guide health investments based on data.
For medical practice leaders, owners, and IT staff at 340B hospitals, knowing how to manage these parts is important to keep the program working and improving health for needy communities.
The 340B Drug Pricing Program aims to allow eligible hospitals to stretch limited federal resources to improve access to essential patient services, particularly for underserved populations, through purchasing outpatient drugs at discounted prices.
By providing discounts on outpatient drugs, the 340B program enables hospitals to reinvest savings into programs that enhance healthcare access and quality, benefiting low-income and uninsured patients.
Despite its growth, the 340B program remains small relative to overall drug sales and plays a critical role in improving healthcare access for low-income patients. Its expansion has been aligned with the needs of underserved populations.
Yes, 340B hospitals reinvest savings into patient services and programs tailored to their communities’ needs, including providing cost-free drugs and essential services like opioid treatment.
340B hospitals report data on community benefits, including nearly $85 billion provided in 2020. Many also adhere to established principles ensuring transparency about how they utilize their savings.
340B hospitals must annually recertify their eligibility, participate in audits by HRSA, maintain auditable records, and often conduct self-audits to ensure compliance with program guidelines.
No, consolidation results from various factors including rising operational costs and administrative burdens, not solely from the 340B program. It allows hospitals to better serve patients regardless of insurance status.
Contract pharmacy arrangements extend the reach of the 340B program by allowing patients easier access to necessary drugs at local pharmacies, thereby enhancing healthcare accessibility, especially for specialty drugs.
Charity care refers to services provided for free to eligible low-income patients; however, total community benefits include broader categories like bad debt and payment shortfalls, illustrating the comprehensive care supplied.
Changing to a rebate model would impose significant financial burdens on hospitals, jeopardizing patient access to necessary medications and making it logistically challenging to manage the procurement and distribution of drugs.
Simbo is using AI agents to automate all phone related workflows. Connect now to know more.
Schedule AI Agents Demo Now© Since 2019, Simbo AI.
