The 340B drug program was created by Congress to provide cheaper drugs for use on poor patients. It has been completely perverted by hospitals and other providers to make billions of dollars in profits and raise costs for consumers. Intense lobbying by the hospitals has prevented needed reforms, but the pressure is rising to do something in an environment in which health care costs are seriously stressing workers and businesses. The state of Minnesota has actually done the country a favor by issuing a regular report on the abuse of 340B by hospitals in the state. The most recent report is analyzed in an excellent post from Drug Channels. (DC Post)
In 2024 non-profit hospitals in Minnesota alone made over $1.3 billion in profit, that’s right, profit, from the program. The way the scam works is this; the hospitals use 340B pricing to buy drugs for every patient they can, most of whom are not the indigent patients the program was designed to help. Then they charge payers, including Medicare and Medicaid, far higher prices for the drug and the hospitals keep the profit. Consumers who have copays or deductibles are hurt by the higher prices as well. It is a disgrace. The details are in the Minnesota report. (Mn. 340B Report)
The trade-off for non-profit status is supposed to be providing care for the poor, but these hospitals provide almost none. What they do is use the money they make for grotesquely excessive executive compensation, huge administrative overstaffing and fancy buildings. And consumers pay for all of this. America’s allegedly non-profit hospitals are hugely profitable and massively wasteful. They are the leading cause of excessive health care costs and cost increases. They have to be reformed and eliminating their ability to abuse 340B would be a good start.
