A new peer-reviewed study in Health Affairs Scholar found 340B hospitals significantly outperform non-participating hospitals financially, raising questions about whether the program is fulfilling its mission.
The study analyzed 2,605 community hospitals using Medicare Cost Report data from 2013 to 2023 and found that 340B participation was associated with 47.5 percent greater total assets compared to non-340B hospitals. The average 340B disproportionate share hospital held $831 million in total assets in 2023. The number of 340B sites was also associated with higher real asset growth, with every ten additional sites linked to a 0.15 percent increase in the annual real asset growth rate, according to the study.
Even after controlling for revenues, profits, teaching status, and bed size, the study found that 340B hospitals spent 22.8 percent more on administrative salaries than non-participating hospitals, translating to approximately $7 million more per year for the average 340B disproportionate share hospital. The authors concluded that "340B-eligible hospitals have had consistently strong financial performance, surpassing non-340B hospitals," and that "the results suggest a need for reform," according to the study.
The study was authored by Neal Masia, Jonathan D. Campbell, Yevgeniy Feyman, and Kenneth Finegold, all researchers affiliated with the National Pharmaceutical Council, a nonprofit research organization that examines the value of medicines and policies affecting patient access to innovative treatments, according to the National Pharmaceutical Council.
The federal 340B Drug Pricing Program has grown rapidly from $44 billion in purchases in 2021 to $81 billion in 2024. While it was intended to have no cost to the federal government, it has ripple effects across Medicare, Medicaid, employer-sponsored insurance plans and drug pricing overall; one estimate puts the annual cost to employers who self-insure at $5.2 billion because providers using 340B can bypass rebates employers receive from pharmacy benefit managers, according to Third Way.
