Measuring the Impact and Size of Hospital Participation in the 340B Drug Discount Program

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The federal 340B drug discount program plays an under-recognized role in financing the nation's health care safety net. Created in 1992, the program offers substantial discounts to qualified safety-net providers-including public hospitals and community health centers-for their purchase of prescription medications they administer or dispense to patients in outpatient settings. By design, the 340B program allows these hospitals and health systems to sell these drugs at higher prices and thus generate revenue without having to pass along savings to patients or insurance plans. With one-third of U.S. hospitals now participating, this expanding program is increasingly a target of reforms for proponents as well as critics. To date, however, there has been no systematic evaluation of the program or how it ensures access to care in vulnerable communities. This multiphase study will seek to: compare safety-net engagement and hospital community benefit investments among 340B-qualifying hospital systems and non-340B hospital systems; determine potential hospital revenue gained from 340B-eligible prescription drug sales; analyze the association between estimated hospital revenue gained and measures of safety-net engagement and hospital community benefit provision investments; estimate the volume of national prescription drug sales eligible for 340B discounts relative to total volume of drug sales; and explore the extent to which 340B-qualifying hospitals are passing on the discounts to patients directly. The study team will merge data from 340B hospital systems, Medicare cost reports, hospital tax returns, the American Hospital Association, the federal American Community Survey, commercial claims, and IMS Health. Armed with evidence of how 340B program money flows to, benefits, and is used by qualifying hospitals, federal and state policymakers will be better positioned to design policies that meet the needs of safety-net providers and their patients.

Grant Details

Grantee Organization:
University of Chicago
Principal Investigator:
Rena Conti, Ph.D.
Award Amount:
$220,000.00
Approval Date:
April 11, 2017

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