A major healthcare policy shift is slipping through New York’s budget process right now — and most New Yorkers have no idea it’s happening.
The State Senate has tucked new language protecting and expanding the federal 340B Drug Pricing Program into its one-house budget resolution. Instead of open debate in committee, it’s being hashed out behind closed doors in negotiations with the Assembly and Governor’s office.
The program was created in 1992 to help safety-net hospitals buy outpatient drugs at deep discounts (often 25–60% below list price) so they could stretch those savings to help low-income and uninsured patients. Sounds great on paper.
But here’s the reality in New York today: hospitals are raking in massive profits from 340B, yet low-income patients are being sent to for-profit pharmacies in Texas, contract pharmacies in affluent suburbs, and even out-of-state chains. Charity care is below the national average, and some of the biggest 340B hospitals are parking hundreds of millions of dollars offshore.
We’re not making this up. The numbers come straight from independent reports by the Pioneer Institute, Job Creators Network, and our own Patients’ Right to Know research.
New York 340B hospitals have 1,695 contract pharmacy arrangements supposedly serving poor patients in the state.
Low-income New York taxpayers are literally being told to fill their prescriptions at for-profit pharmacies in Texas while the discounts meant for them are being resold elsewhere.
Even worse: 64% of the contract pharmacies supposedly helping New York’s poor patients are located in affluent neighborhoods — the opposite of where the program was designed to work. Only 12% are in rural areas, even though 31% of the state’s zip codes are rural. And just 29% are in zip codes with household income below the state median of $86,830.
Look at the top five 340B contract pharmacies with the most agreements in New York:
These middlemen and big corporations are pocketing the spread between the steep 340B discount and what they charge insurers or patients.
One example that should shock every New Yorker: A 340B hospital bought an essential cancer drug for about $3,400 through the program — then turned around and sold it for more than $25,000. That’s over $20,000 in profit that was supposed to help vulnerable patients, not pad hospital margins or middleman fees.
New York’s 340B hospitals provide only 1.91% of operating expenses in charity care — below the national average of 2.15%.
Meanwhile, the Job Creators Network’s new analysis of public tax returns shows New York 340B hospitals are collectively holding $1.257 billion in offshore accounts. That includes:
These are the same institutions getting billions in federal drug discounts, not to mention the massive tax breaks they receive for being classified as “nonprofit.” Taxpayers and employers are footing the bill while money flows overseas.
Employers in New York are already paying an estimated $445 million more in healthcare costs every year because of foregone rebates caused by the 340B program. Proposed contract pharmacy legislation would add another $138.9 million in costs to employers and state/local governments.
The original 340B program was about helping patients, not creating a cash cow for hospitals, PBMs, and offshore accounts.
That’s why we launched the Patients’ Right to Know campaign. New Yorkers deserve answers to these simple questions:
Real reform is straightforward and already on the table:
New York’s budget negotiations are moving fast. Closed-door deals are happening now.
Tell your legislators: No more 340B expansion without transparency and patient protections.
Visit PatientsRight2Know.com to learn more and send a message to Albany. Share this post — the more New Yorkers who understand what’s really happening with their tax dollars and their prescriptions, the harder it will be for this program to keep operating in the shadows.
The 340B program was meant to help patients like you and your family. It’s time we made sure it actually does.
Sources & Further Reading
Stay tuned — we’ll be breaking down the same issues in states across the country. The abuse isn’t just in New York. But the solutions can start here.
Patients Rising — Putting patients first. Always.