It’s no secret that for working families, the cost of healthcare has spiraled out of control. But much less known is the degree to which the 340B Drug Pricing Program, built to help the patients who need it most, has been quietly making it worse for years.
Originally created as a safety net, 340B has instead become a profit net for conglomerate hospital systems and national chain pharmacies. Now, the New York state Senate is advancing legislation to dramatically expand the program — with no new accountability measures, no efforts to shine a light on where the money is going, and no guarantee that a single additional dollar will reach patient pockets.
340B was designed to give low-income families and patients in rural areas access to deeply discounted medications. Drug manufacturers would provide these discounts to smaller hospitals, Federally Qualified Health Centers, rural clinics, mom-and-pop pharmacies with the promise that those savings would be passed on to patients.
But what began as a small safety-net program has exploded into one of the largest drug purchasing programs in America, eclipsing Medicaid. And because there are no clear rules requiring that savings be passed directly to patients, large hospital systems take advantage of this ambiguity by billing low-income patients the full retail price, then pocketing the difference to maximize their bottom line.
To be clear: many if not most 340B-qualified entities are doing exactly what the program intended, using the savings to reach underserved patients and keep their doors open. But when the government fails to hold providers accountable, bad actors find loopholes.
Recent research shows hospital prices have grown three times faster than inflation since 2000 — twice as fast as prescription drugs. In that time, more than 1,300 hospital mergers have reshaped the healthcare system. As a result of these combinations, prices have increased with no measurable improvement in patient care.
New Yorkers are already paying the price, and for communities of color — already navigating higher rates of diabetes, hypertension, and chronic illness — the lack of transparency has a profound impact. This is not a subtle failure: the vast majority of 340B hospitals provide charity care below the national average. Meanwhile, in Harlem and at National Action Network chapters across the state, I’ve heard from countless patients who have lost their neighborhood pharmacy and are now choosing between groceries and a monthly prescription.
Research consistently shows mergers in the healthcare industry have devastating impacts on communities of color, and especially so in low-income Black neighborhoods, 50% of which are already found in pharmacy deserts. Predictably, the institutions pocketing 340B revenues are the same ones fueling this consolidation all while the neighborhoods around them get poorer and sicker.
The state Senate’s proposed response, S.1913, does nothing to ensure discounts are reaching the neediest populations. Instead, it would require manufacturers to ship drugs to an unlimited number of contract pharmacies with no added oversight, further empowering for-profit chains at the expense of true safety-net providers and prohibiting regulators from tracking how those dollars are used, emboldening bad actors while taking money away from those doing the most good.
Legislators can continue letting for-profit interests exploit a program built for the poor, or they can close the loopholes, demand transparency, and ensure 100% of 340B savings are used to serve the neediest patients — not pad balance sheets. The Legislature must say no to S.1913 and protect the patients for whom 340B was designed.
Sharpton is the founder and president of National Action Network.