The study, published in the peer-reviewed public health journal Inquiry, adds to a growing body of public health research on how the federal 340B program is failing to live up to its original promise to help patients access more affordable medicines.
“Margins on 340B drugs were higher among facilities in stronger bargaining positions and those serving wealthier areas,” concludes researchers Robert J. Nordyke, PhD, an expert in health economics; Jason Motyka, PharmD, an expert in drug pricing; and Dr. Julie A. Patterson, PharmD, PhD, who previously served as an Assistant Professor in Pharmacoeconomics and Health Outcomes at the Virginia Commonwealth University School of Pharmacy.
“These findings add to the growing body of literature on the expansion of the 340B program into more affluent communities, informing calls for reforms to ensure the 340B program serves low-income and uninsured patients,” the public health research team concluded.
340B Program’s Original Intent: Affordable Medication for Rural & Low-Income Patients
Congress created the federal 340B program to provide rural and low-income patients with access to discounted medications via 340B hospitals. The 340B program requires pharmaceutical companies to sell prescription medications at discounted prices to eligible providers.
But, many hospitals never pass the savings on to patients. Instead, hospitals keep the money for themselves and charge patients full price.
“The results are in on the 340B racket: Government money goes in. Wealthy hospitals get richer. Rural and low-income patients are left out,” explains Terry Wilcox, Co-Founder & Chief Mission Officer at Patients Rising.
Program Hijacked: Profits Over Patients
Researchers found that hospital outpatient departments in less competitive markets enjoy significantly higher margins than free-standing clinics, a trend echoed in a 2025 IQVIA analysis showing insured patients nationwide pay hundreds of dollars in higher costs due to 340B markups.
This isn’t a one-off finding. A recent Pioneer Institute study identifies 340B as a revenue generator for large hospital systems. Meanwhiile, a Cicero Institute research report notes that 340B savings are not consistently reaching the vulnerable populations they were intended to serve.
The geographic inequity is stark. The Inquiry study reports, “Facilities in areas with a greater share living under 150% of the FPL achieve adjusted 340B margins that are lower than facilities in higher-income areas.”
Poorer regions lose out, while wealthy ones cash in. This is worsened by the boom in contract pharmacies—over 33,000 nationwide. A JAMA Health Forum study found their growth from 2011 to 2019 was “concentrated in affluent communities,” not underserved areas.
Adding insult to injury, many 340B pharmacies supposedly serving low-income patients are out-of-state. In Nebraska, for instance, 68 percent of 340B pharmacies linked to local hospitals operate in affluent neighborhoods, often far from rural or poor communities.
The 340B program was meant to stretch resources for the uninsured, yet it’s now a boon for “facilities in stronger bargaining positions” in wealthy markets, leaving rural patients behind.
Hospitals and PBMs Exploit the Loopholes
Profit motives drive this shift. The study warns, “Higher 340B margins for drugs dispensed to more affluent, better insured patients may incentivize the expansion of contract pharmacies into wealthier areas observed by others.”
PBMs like CVS Health, Express Scripts, and OptumRx, with over 94,000 340B contracts, pocket more than 50 cents of each $1 in profits, diverting funds meant for patient care. Meanwhile, “facilities in wealthy areas would not increase levels or quality of uncompensated care despite higher 340B margins,” the Inquiry study reveals.
“Research on 340B entities enrolling after the 2003 Medicare Modernization Act expanded 340B eligibility suggests that entities enrolling in 2004 or later often serve wealthier communities and report lower spending on uncompensated care,” the study notes.
In Nebraska, as one example, less than one percent of 340B hospital revenues fund charity care—far below the national average.
Patient Call to Action
Terry Wilcox, Co-Founder & Chief Mission Officer at Patients Rising sums up the stakes: “Patients deserve transparency and accountability from a program meant to help them—not a system where out-of-state pharmacies and wealthy hospitals pocket the savings meant for rural and low-income patients.”
Patients Rising is working to advocate for patient-centered reforms. Among their recommendations for state lawmakers:
- Transparency: Mandate reporting of 340B profits and usage
- Community Focus: Direct funds to local, underserved areas, not out-of-state pharmacies
- Patient Rights: Ensure patients know if they’re getting 340B drugs and what hospitals paid