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AIR 340B: New Analysis Shows Most 340B Hospitals Provide Little Charity Care

March 25, 2014

Today, the Alliance for Integrity and Reform of 340B (AIR 340B) released a new report, showing that a substantial portion of hospitals enrolled in the 340B drug discount program provide only the barest amount of charity care, and as such they are not fulfilling Congress’ expectations about the program. Congress created the program in 1992 to help uninsured indigent patients gain better access to prescription medicines. The original intention of the program was to provide discounts to outpatient facilities for the purpose of sustaining certain services to this population.

As a member of AIR 340B, we call on Congress to revise eligibility criteria for the 340B drug discount program.

Based on data analyzed by Avalere Health, the study notes that the 340B drug discount program was designed by Congress to provide access to prescription medicines for uninsured, vulnerable patients in the outpatient hospital setting. Yet, the analysis shows, most hospitals that benefit from the program provide less charity care than the national average for all hospitals, while charity care in about a quarter of all 340B hospitals represents 1 percent or less of total patient costs. These troubling findings reveal a pressing need to revise eligibility criteria for the program.

Study highlights:

• More than two-thirds of hospitals that receive 340B drug discounts provide lesscharity care as a percent of patient costs than the national average for all hospitals, including for-profit hospitals.

• For approximately a quarter (24%) of 340B hospitals, charity care represents 1 percent or less of the hospitals’ total patient costs.

Broad eligibility criteria for hospitals have led to an explosion in the number of hospitals in the 340B program. Today, one-third of all hospitals in the country participate in the 340B program to get the discounts that the program offers; that number is expected to grow, particularly absent an effort to tighten eligibility requirements. Drug purchases by these hospitals through the 340B program will more than double, from $6B in 2010 to $13.4B by 2016, though little of the billions of dollars in discounts can be directly tracked to or linked with charity care for indigent patients.

This is an important safety net program designed to help uninsured indigent patients gain greater access to prescription medicines. Improved transparency and oversight of the program is needed to ensure it remains aligned with its original intent and supports patients who need the program. Revising hospital eligibility criteria will help ensure the 340B program is meeting its intended purpose and aiding those hospitals providing a true safety net function by serving high numbers of uninsured indigent patients.

You can access the study here, and the press release here. For more information on the 340B program, please access this white paper.