Fact vs. Fiction

FICTION: THE 340B PROGRAM HAS GROWN OUT OF CONTROL.

FACT:

Federal law strictly defines which providers may participate in 340B, and a bipartisan Congress has periodically updated that definition to include new providers, such as critical access hospitals. In short, the program has grown entirely consistent with law.

FICTION: 340B DISCOUNTS BURDEN DRUG COMPANIES.

FACT:

In 2015, according to federal figures confirmed by government witnesses at a May 2018 Senate hearing, 340B discounts totaled $6 billion, or about 1.3 percent of $457 billion in drug sales. The top 10 largest drug companies enjoy an average profit margin of nearly 20 percent. Essential hospitals, by contrast, operate with an average margin of 4 percent.

FICTION: 340B USES TAXPAYER DOLLARS.

FACT:

340B provides no government funding to hospitals, and there is no such thing as “340B revenue.” Rather, the program requires drugmakers to sell their products at a discount to safety-net providers. So, it saves money taxpayers otherwise would spend on indigent care. Further, all hospitals in the program must be nonprofit or government entities.

FICTION: 340B HOSPITALS PROVIDE TOO LITTLE CHARITY CARE.

FACT:

The average essential hospital provides more than $70 million annually in total uncompensated care to low-income patients—nine times as much as other hospitals. Charity care represents only a slice of that larger mission. Studies show 340B disproportionate share hospitals provide more than twice as much care to Medicaid and low-income Medicare patients than non-340B, acute-care hospitals.

FICTION: THE LAW REQUIRES THAT 340B DISCOUNTS GO DIRECTLY TO PATIENTS.

FACT:

Congress explicitly designed the 340B program to let hospitals use discounts to “stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services” (H.R. REP. 102-384(II), at 12 (1992)). Of course, hospitals do provide discounts directly to low-income patients, but they also use 340B savings to support other valuable services for the vulnerable.

FICTION: MEDICARE OUTPATIENT CUTS TO 340B HOSPITALS WILL HELP BENEFICIARIES.

FACT:

The majority of savings from the 27 percent cut to 340B hospitals under the Outpatient Prospective Payment System will go to third-party payers, such as insurance companies and Medigap plans. The cut fails to help patients, hurts the hospitals on which they rely, and dilutes the value of 340B by spreading savings across all hospitals—even those not in the program.

FICTION: THERE’S NO TRANSPARENCY FOR HOSPITALS IN 340B

FACT:

Hospitals in the 340B program take extensive steps to comply with the program’s reporting requirements and bear the full cost of compliance, further straining their already slim margins. Since fiscal year (FY) 2012, hospitals and other 340B covered entities have provided ample transparency through nearly 900 federal audits. By contrast, drugmakers have faced only 11 audits since FY 2015, the year manufacturer audits began.