Howard Dean, the former Governor of Vermont, has raised concerns about hospitals' use of the 340B Drug Pricing Program. In an opinion piece for USA TODAY, Dean said that hospitals are exploiting the program by charging patients and insurers full price for discounted drugs without any obligation to share the savings.
"But there's no actual requirement for hospitals to pass along the savings from 340B discounts," said Dean. "Many large hospitals buy medicines at a discount but charge patients and insurers full price –– or even mark up the prices –– thus boosting their profits by pocketing the difference. The typical 340B enrolled hospital provides lower than average levels of charity care. If we continue to let large health systems treat the program like a cash cow, costs will keep rising for both patients and employee health plans, and disparities in care will widen."
According to the U.S. Government Accountability Office, Congress established the 340B Drug Pricing Program in 1992. The program was designed to help safety-net providers extend federal resources and expand services for low-income, uninsured, and rural patients by offering discounted outpatient drugs. However, oversight and transparency challenges have led to questions about whether hospitals are using these savings as Congress intended to benefit vulnerable populations.
340B Health notes that hospitals must meet certain eligibility criteria, such as serving large numbers of Medicaid and low-income patients. Participation in the program does not require them to share savings with patients. Instead, hospitals can retain the difference between discounted acquisition costs and reimbursements without mandatory reporting on how these funds are utilized.
ProxsysRx explains that six types of providers can participate in the 340B program, including disproportionate share hospitals, children’s hospitals, and rural providers. Once enrolled, these hospitals are not obligated to pass drug discounts directly to patients. This allows them to bill at full price and keep the profit margin—a practice critics argue diverges from the program’s original intent.
Dean's background as a physician and his tenure as chair of the Democratic National Committee from 2005 to 2009 lend weight to his commentary on healthcare access issues. His critiques often focus on structural problems within healthcare systems, such as the lack of requirements for hospitals to pass along federal drug discount savings directly to patients.
