MESSAGE
| DATE | 2026-05-08 |
| FROM | Ruben Safir
|
| SUBJECT | Subject: [Hangout - NYLXS] 340B program under attack
|
https://www.wsj.com/opinion/340b-drug-program-healthcare-daniel-traynor-north-dakota-abbvie-pharma-hospitals-6e3650be
https://www.forbes.com/sites/richardfowler/2026/05/06/the-fight-over-340b-why-a-little-known-drug-program-matters-for-black-and-low-income-patients/
forbes.com
The Fight Over 340B: Why A Little-Known Drug Program Matters For Black
And Low-Income Patients
Richard Fowler
8–10 minutes
Howard University Investigative Piece
WASHINGTON, DC - SEPTEMBER 20: Howard University President Wayne A. I.
Frederick discusses a plan to make improvements to Howard University's
financial standing and patient services at a media briefing at Howard
University in Washington, D.C. on September, 20, 2016. The hospital has
had a fair number of lawsuits and financial troubles. (Photo by Marvin
Joseph/The Washington Post via Getty Images)
The Washington Post via Getty Images
Nearly three miles from the halls of power in Washington, Howard
University Hospital operates at the intersection of policy and
reality—where decisions made on Capitol Hill carry real consequences for
patients and their families.
Designated by the federal government as a disproportionate share
hospital, Howard reflects the very mission behind the federal 340B drug
pricing program. For decades, 340B has allowed safety-net providers to
stretch limited resources by purchasing discounted medications and
reinvesting those savings into patient care.
But that balancing act is becoming increasingly difficult.
Rising healthcare costs, combined with ongoing pressure on Medicaid and
Medicare reimbursement, have left Howard and other hospitals serving a
predominantly low-income, Black and Brown patient population navigating
a widening financial gap. In that environment, 340B has become more than
a policy tool—it has become a financial lifeline.
“The 340B program has been successful in aiding safety net hospitals and
clinics serving low-income and underserved populations,” MIT’s Ryan P.
Knox and Junyi Wang wrote in a 2023 report published in JAMA Health
Forum. “The consequences of eliminating or substantially restricting the
program would be great.”
Created by Congress in 1992, the 340B Drug Pricing Program was
established to support safety-net hospitals and clinics often located in
low-income rural and urban communities. By allowing these clinics and
hospitals to purchase discounted outpatient drugs, the program created
excess revenue for these healthcare centers, which was used to reach
more patients, expand healthcare services and programs and subsidize
care not compensated by Medicaid, Medicare or other means.
MORE FOR YOU
The 340B program applies to a wide range of outpatient prescription
drugs—including treatments for chronic conditions like diabetes and
hypertension, HIV medications, and high-cost specialty drugs such as
cancer therapies—making it a significant financial lever for hospitals
serving low-income patients.
Today, the 340B program functions as a financial offset in a system
where safety-net hospitals are often reimbursed below the cost of care.
Hospitals purchase outpatient drugs from manufacturers at a federally
mandated discount, then are reimbursed by insurers—including Medicaid,
Medicare or private plans—at standard rates. The difference between the
discounted acquisition cost and reimbursement is not paid out as profit
but is typically reinvested in patient services, helping to fund
everything from uncompensated care to community clinics and expanded
treatment programs.
Part of daily life routine for an adult with ADHD, taking the right
medication that helps them focus on daily life and achieve their goals
throughout the day. These ADHD pills and other medicines are displayed
with open pill bottles on top of a white counter top in the kitchen.
getty
That financial model is now facing pressure from multiple directions.
Hospitals across the country are already contending with workforce
shortages and rising labor costs, particularly for nurses and
specialized staff. At the same time, Medicaid—the largest payer for many
safety-net providers—continues to reimburse at rates that often fall
below the cost of care, with some states implementing cuts or tightening
eligibility in recent years.
The recent passage of the One Big Beautiful Bill Act will cut federal
Medicaid spending by at least $900 billion over 10 years. According to
the Center for American Progress (CAP), this will potentially result in
11 million people losing coverage.
“The programs are a lifeline for hospitals, especially in rural areas,
where hundreds of hospitals risk closure under financial strain if their
patients lose insurance and can no longer pay for care,” CAP’s Micah
Johnson and Andrea Ducas said.
The pharmaceutical industry’s push to change the 340B program has added
another layer of pressure on some of the nation’s safety net hospitals.
Several drug manufacturers have moved to restrict how discounted drugs
are distributed—particularly through contract pharmacies.
Another proposal triggers a shift toward a rebate model that would
require hospitals to pay full price upfront and seek reimbursement later.
The hospital groups and policymakers criticizing those changes argue
that such a shift would strain already-thin operating margins by
increasing short-term cash-flow demands and administrative
burden—particularly for smaller and rural providers with limited
financial flexibility.
According to analyses from the Government Accountability Office and
industry groups, hospitals participating in 340B tend to operate on
thinner margins while providing higher levels of uncompensated care than
non-participating hospitals.
The debate is increasingly playing out beyond Washington. A growing
number of states have enacted or are considering legislation to protect
340B access, underscoring both the program’s financial significance and
the lack of a unified federal path forward.
The question now is not just how the program works—but whether it can
continue to function under growing financial and political strain.
As lawmakers push for “reforms,” some proposals would require hospitals
to hire additional administrative staff to oversee the program’s
implementation. For safety-net providers already grappling with nursing
shortages, a challenge well-documented in Forbes, that shift could
further increase administrative overhead and divert limited resources
away from patient care.
Dearborn, Michigan USA, 29 April 2026, Teamster nurses 'practice picket'
at Corewell Health East. The nurses voted by a 90 percent margin to
authorize a strike as they fight for their first union contract. Their
main issues are staffing, wages, health insurance, and workplace safety.
(Photo by: Jim West/UCG/Universal Images Group via Getty Images)
UCG/Universal Images Group via Getty Images
While 340B is a federal program, many states have seen its benefits and
are doing everything in their power to ensure that investments in their
residents can actually stay in place. Legislatures in Arkansas and
Louisiana passed laws blocking drug manufacturers from restricting
access to local pharmacies that partner with 340B hospitals to dispense
discounted medications to patients. As of mid-2025, several states
including Colorado, Idaho, Kansas, Maryland, Minnesota, Mississippi,
Missouri, Nebraska, New Mexico, North Dakota, South Dakota, Tennessee,
Utah and West Virginia have followed suit, signaling a broader
recognition of hospitals’ increasingly narrow access to discounted drugs.
Beyond those efforts, Rhode Island and Hawaii have passed—or are in the
process of passing—measures that prohibit manufacturer restrictions on
340B drugs. In Michigan, lawmakers are working to pass legislation that
will increase the 340B requirement and limit savings usage to patient
services rather than hospital capital improvements.
Taken together, these state-level moves are more than policy
tweaks—they’re a clear signal of just how essential the 340B program has
become, particularly for communities that would otherwise be left behind.
The data bears that out. A 2019 report from L&M Policy Research found
that 340B hospitals treat a significantly higher share of underserved
patients than their non-340B counterparts. The percentage of Black
patients served at 340B hospitals is roughly 75% higher than at other
hospitals and physician offices.
The same report showed that 29% of patients treated at 340B hospitals
are disabled, more than double the rate at other hospitals. When it
comes to patients eligible for Medicare and Medicaid, 340B hospitals
treat them at rates 43% to 71% higher than non-340B providers.
For hospitals like Howard University Hospital, the debate over 340B is
not theoretical—it’s financial, operational and, ultimately, human. At a
time when safety-net providers are already navigating Medicaid pressure,
workforce shortages and rising costs, the question is not just whether
the program will change, but whether the system it supports can
withstand those changes.
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The Great 340B Healthcare Grift
The Editorial Board
~2 minutes
Politicians love to hate Big Pharma even as government policies raise
drug prices. A textbook example is the federal 340B drug program, which
hospitals exploit to raid drug makers. Since the press missed it, we’ll
tell you about the spectacular opinion by a federal judge detailing how
this well-intended program has become a scam on taxpayers.
Last week federal Judge Daniel Traynor blocked a North Dakota law that
sought to exploit 340B to transfer hundreds of millions of dollars from
drug makers to hospitals and pharmacies. But his special contribution is
his opinion explaining how a program “meant to help American poor is
being abused to provide a windfall to hospital conglomerates and
participating pharmacies.”
We’ve previously reported how 340B has become a cash cow for hospitals.
Congress created the program in 1992 to assist hospitals serving large
numbers of low-income patients. To participate in Medicare and Medicaid,
drug firms are required to “offer” their products at steep discounts to
such hospitals.
Discounts typically range from 20% to 50% of a drug’s sticker price. “In
some cases, the discount is so steep hospitals pay ‘a penny per unit,’”
Judge Traynor writes. Hospitals and pharmacies with which they contract
dispense the drugs to patients who pay the non-discounted prices (or
their insurers do). This is a sweet arbitrage for hospitals and pharmacies.
Copyright ©2026 Dow Jones & Company, Inc. All Rights Reserved.
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