A newly published paper in The Milbank Quarterly adds to the growing body of evidence that the federal 340B Drug Pricing Program has strayed far from its original purpose, strengthening the case for meaningful congressional reform.
In a recent RealClearMarkets commentary, Market Institute Senior Fellow Norm Singleton highlights Stretching Scarce Authorizing Legislation as Far as Possible: A Legislative History of the 340B Drug Pricing Program, which traces the origins of the program and explains how decades of expansion have transformed what was intended to be a narrowly targeted safety-net initiative into a program that often benefits large hospital systems without requiring greater care for vulnerable patients.
“Hospitals and clinics that participate in Section 340B are supposed to use their savings to provide care to the uninsured. However, nothing in the law requires the qualified entities to actually use their Section 340B savings to provide such care.”
Singleton explains that Congress created Section 340B in 1992 to offset higher drug costs imposed on safety-net providers following the creation of the Medicaid Drug Rebate Program. While the original goal was to help hospitals serving low-income and uninsured patients purchase medications at discounted prices, the program has expanded far beyond that intent.
The article points to multiple studies showing little evidence that 340B participation has translated into expanded care for underserved populations. Instead, the program has encouraged hospital consolidation by allowing large health systems to extend eligibility through commonly owned hospitals, clinics, and physician practices.
“Congress should reform Section 340B by requiring that hospitals spend their Section 340B savings to help low-income and uninsured Americans.”
Singleton concludes that straightforward reforms—requiring hospitals to demonstrate that 340B savings are used to benefit vulnerable patients and limiting eligibility to entities that genuinely qualify under the law—would restore the program to its original mission while reducing incentives for consolidation and saving taxpayer dollars.
Read more in RealClearMarkets by clicking here.
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